File No. 33-48926
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 7 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 7 [X]
(Check appropriate box or boxes.)
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Daniel C. Maclean III, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
----
X on December 1, 1995 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
on (date) pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
on (date) pursuant to paragraph (a)(ii) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
----
Registrant has registered an indefinite number of shares of its common
stock under the Securities Act of 1933 pursuant to Section 24(f) of the
Investment Company Act of 1940. Registrant's Rule 24f-2 Notice for the
fiscal year ended July 31, 1995 was filed on September 27, 1995.
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in Short Term Intermediate
Part A of Income Fund Term Income Fund
Form N-1A Caption Page Page
- --------- -------- ----------- ----------------
1 Cover Page Cover Cover
2 Synopsis 3 3
3 Condensed Financial
Information 4 *
4 General Description of
Registrant 4 3
5 Management of the Fund 7 4
5(a) Management's Discussion
of Fund's Performance * *
6 Capital Stock and Other
Securities 18 25
7 Purchase of Securities
Being Offered 8 9
8 Redemption or
Repurchase 13 17
9 Pending Legal
Proceedings * *
Items in
Part B of
Form N-1A Caption Both Funds
- --------- -------- ----------
10 Cover Page Cover
11 Table of Contents Cover
12 General Information and History B-30
13 Investment Objectives and Policies B-2
14 Management of the Fund B-12
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
Cross-Reference Sheet Pursuant to Rule 495(a) (continued)
Items in
Part B of
Form N-1A Caption Both Funds
- --------- -------- ----------
15 Control Persons and Principal Holders
of Securities B-16
16 Investment Advisory and Other Services B-16
17 Brokerage Allocation B-28
18 Capital Stock and Other Securities B-30
19 Purchase, Redemption and Pricing of
Securities Being Offered B-18, B-20
20 Tax Status *
21 Underwriters B-18
22 Calculations of Performance Data B-29
23 Financial Statements B-40
Items in
Part C of
Form N-1A Caption Both Funds
- --------- -------- ----------
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under
Common Control with Registrant C-4
26 Number of Holders of Securities C-4
27 Indemnification C-4
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
Cross-Reference Sheet Pursuant to Rule 495(a) (continued)
Items in
Part C of
Form N-1A Caption Both Funds
- --------- -------- ----------
28 Business and Other Connections of
Investment Adviser C-5
29 Principal Underwriters C-13
30 Location of Accounts and Records C-14
31 Management Services C-14
32 Undertakings C-14
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
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PROSPECTUS DECEMBER 1, 1995
DREYFUS SHORT TERM INCOME FUND
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DREYFUS SHORT TERM INCOME FUND (THE "FUND") IS A SEPARATE
NON-DIVERSIFIED PORTFOLIO OF DREYFUS INVESTMENT GRADE BOND FUNDS, INC., AN
OPEN-END, MANAGEMENT INVESTMENT COMPANY (THE "COMPANY"), KNOWN AS A MUTUAL
FUND. THE FUND'S INVESTMENT OBJECTIVE IS TO PROVIDE YOU WITH AS HIGH A LEVEL
OF CURRENT INCOME AS IS CONSISTENT WITH THE PRESERVATION OF CAPITAL. THE FUND
INVESTS PRINCIPALLY IN A BROAD RANGE OF INVESTMENT GRADE DEBT SECURITIES OF
DOMESTIC AND FOREIGN ISSUERS AND MAINTAINS A DOLLAR-WEIGHTED AVERAGE PORTFOLIO
MATURITY OF THREE YEARS OR LESS.
YOU CAN INVEST, REINVEST OR REDEEM SHARES AT ANY TIME WITHOUT CHARGE
OR PENALTY.
THE FUND PROVIDES FREE REDEMPTION CHECKS, WHICH YOU CAN USE IN
AMOUNTS OF $500 OR MORE FOR CASH OR TO PAY BILLS. YOU CONTINUE TO EARN INCOME
ON THE AMOUNT OF THE CHECK UNTIL IT CLEARS. YOU CAN PURCHASE OR REDEEM SHARES
BY TELEPHONE USING DREYFUS TELETRANSFER.
THE DREYFUS CORPORATION PROFESSIONALLY MANAGES THE FUND'S PORTFOLIO.
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUND THAT
YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ AND RETAINED FOR FUTURE
REFERENCE.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED DECEMBER 1, 1995,
WHICH MAY BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF
CERTAIN AREAS IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST
TO SOME INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION AND IS INCORPORATED HEREIN BY REFERENCE. FOR A FREE COPY, WRITE TO
THE FUND AT 144 GLENN CURTISS BOULEVARD, UNIONDALE, NEW YORK 11556-0144, OR
CALL 1-800-645-6561. WHEN TELEPHONING, ASK FOR OPERATOR 144.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
THE NET ASSET VALUE OF FUNDS OF THIS TYPE WILL FLUCTUATE FROM TIME TO TIME.
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TABLE OF CONTENTS
PAGE
ANNUAL FUND OPERATING EXPENSES.................... 3
CONDENSED FINANCIAL INFORMATION................... 4
DESCRIPTION OF THE FUND........................... 4
MANAGEMENT OF THE FUND............................ 7
HOW TO BUY SHARES................................. 8
SHAREHOLDER SERVICES.............................. 10
HOW TO REDEEM SHARES.............................. 13
SHAREHOLDER SERVICES PLAN......................... 15
DIVIDENDS, DISTRIBUTIONS AND TAXES................ 15
PERFORMANCE INFORMATION........................... 17
GENERAL INFORMATION............................... 18
APPENDIX.......................................... 19
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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This Page Intentionally Left Blank
Page 2
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
<S> <C>
Management Fees (after expense reimbursement).................................................. .35%
Other Expenses................................................................................. .45%
Total Fund Operating Expenses (after expense reimbursement).................................... .80%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
EXAMPLE:
You would pay the following
expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at 1 YEAR 3 YEARS 5 YEARS 10 YEARS
the end of each time period: $8 $26 $44 $99
</TABLE>
- ----------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL
RETURN, THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL
RETURN GREATER OR LESS THAN 5%.
- ----------------------------------------------------------------------------
The purpose of the foregoing table is to assist you in understanding
the costs and expenses borne by the Fund, the payment of which will reduce
investors' annual return. Total Fund Operating Expenses noted above have been
restated to reflect the Company's termination of its Rule 12b-1 plan and an
undertaking by The Dreyfus Corporation that if, in any fiscal year through
July 31, 1996, certain Fund expenses, including the management fee, exceed
.80% of the value of the Fund's average net assets for the fiscal year, the
Fund may deduct from the payment to be made to The Dreyfus Corporation
underthe Management Agreement or bear, such excess expense. The expenses
noted above, without reimbursement, would have been: Management Fees _ .50%
and Total Fund Operating Expenses _ .95%. The information in the foregoing
table does not reflect any other fee waivers or expense reimbursement
arrangements that may be in effect. You can purchase Fund shares without
charge directly from the Fund's distributor; you may be charged a nominal fee
if you effect transactions in Fund shares through a securities dealer, bank
or other financial institution. See "Management of the Fund," "How to Buy
Shares" and "Shareholder Services Plan."
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited by Ernst &
Young LLP, the Fund's independent auditors, whose report thereon appears in
the Statement of Additional Information. Further financial data and related
notes are included in the Statement of Additional Information, available upon
request.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share
of Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each year indicated. This information
has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------------------
PER SHARE DATA: 1993(1) 1994 1995
------- ----- ------
<S> <C> <C> <C>
Net asset value, beginning of year............................... $12.50 $12.47 $11.94
------ ------ ------
INVESTMENT OPERATIONS:
Investment income_net .......................................... .89 .84 .85
Net realized and unrealized (loss) on investments................ (.01) (.54) (.05)
------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS................................. .88 .30 .80
------ ------ ------
DISTRIBUTIONS:
Dividends from investment income-net............................. (.89) (.83) (.85)
Dividends from net realized gain on investments.................. (.02) -_ -_
------ ------ ------
TOTAL DISTRIBUTIONS.............................................. (.91) (.83) (.85)
------ ------ ------
Net asset value, end of year..................................... $12.47 $11.94 $11.89
====== ======= ------
TOTAL INVESTMENT RETURN............................................ 7.68%(2) 2.47% 7.05%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets ......................... -_ .24% .61%
Ratio of net investment income to average net assets............. 7.58%(2) 6.79% 7.26%
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation.......................... 1.12%(2) .71% .34%
Portfolio Turnover Rate.......................................... 54.59%(3) 74.90% 511.62%
Net Assets, end of year (000's omitted).......................... $205,736 $277,028 $210,524
- -----------------
(1)From August 18, 1992 (commencement of operations) to July 31, 1993.
(2)Annualized.
(3)Not annualized.
</TABLE>
Further information about the Fund's performance is contained in its
annual report which may be obtained without charge by writing to the address
or calling the number set forth on the cover page of this Prospectus.
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE
The Fund's investment objective is to provide you with as high a
level of current income as is consistent with the preservation of capital. It
cannot be changed without approval by the holders of a majority (as defined
in the Investment Company Act of 1940, as amended (the "1940 Act")) of the
Fund's outstanding voting shares. There can be no assurance that the Fund's
investment objective will be achieved.
MANAGEMENT POLICIES
Under normal market conditions, the Fund invests at least 65% of its
net assets in investment grade debt securities and securities with debt-like
characteristics, such as bonds, debentures, notes, mortgage-related
securities and asset-backed securities of domestic and foreign issuers and
municipal obligations. The Fund may invest up to 30% of the value of its
total assets in securities of foreign issuers. See "Appendix_Certain
Portfolio Securities."
Page 4
Investment grade debt securities are those rated at least Baa by
Moody's Investors Service, Inc. ("Moody's") or at least BBB by Standard &
Poor's Ratings Group, a division of TheMcGraw Hill Companies, Inc. ("S&P"),
Fitch Investors Service, L.P. ("Fitch") or Duff & Phelps Credit Rating Co.
("Duff") or, if unrated, deemed to be of comparable quality by The Dreyfus
Corporation. Debt securities rated Baa by Moody's and BBB by S&P, Fitch and
Duff are considered investment grade obligations which lack outstanding
investment characteristics and may have speculative characteristics as well.
The Fund may invest up to 35% of the value of its net assets in debt
securities rated lower than Baa by Moody's and BBB by S&P, Fitch and Duff and
as low as Caa by Moody's and CCC by S&P, Fitch and Duff, or, if unrated,
deemed to be of comparable quality by The Dreyfus Corporation. Securities
rated Caa by Moody's and CCC by S&P, Fitch and Duff are considered to have
predominantly speculative characteristics with respect to capacity to pay
interest and repay principal and to be of poor standing. The Fund intends to
invest less than 35% of its net assets in securities rated lower than
investment grade or if unrated, deemed to be of comparable quality by
TheDreyfus Corporation. See "Investment Considerations and Risks _ Lower
Rated Securities" below for a discussion of certain risks, and "Appendix" in
the Statement of Additional Information. Under normal market conditions, the
dollar-weighted average maturity of the Fund's portfolio is three years or
less.
The Fund may invest in money market instruments consisting of U.S.
Government securities, certificates of deposit, time deposits, bankers'
acceptances, short-term investment grade corporate bonds and other short-term
debt instruments, and repurchase agreements, as set forth under "Appendix
_Certain Portfolio Securities _ Money Market Instruments." Under normal
market conditions, the Fund does not expect to have a substantial portion of
its assets invested in money market instruments. However, when The Dreyfus
Corporation determines that adverse market conditions exist, the Fund may
adopt a temporary defensive posture and invest all of its assets in money
market instruments.
The Fund's annual portfolio turnover rate, under certain market
conditions, could exceed 150%. Higher portfolio turnover rates usually
generate additional brokerage commissions and expenses and the short-term
gains realized from these transactions are taxable to shareholders as
ordinary income. In addition, the Fund may engage in various investment
techniques, such as foreign currency transactions, leveraging and lending
portfolio securities. See also "Investment Considerations and Risks" and
"Appendix _ Investment Techniques" below and "Investment Objective and
Management Policies _ Management Policies"in the Statement of Additional
Information.
INVESTMENT CONSIDERATIONS AND RISKS
GENERAL _ The Fund's net asset value per share should be expected to
fluctuate. Investors should consider the Fund as a supplement to an overall
investment program and should invest only if they are willing to undertake
the risks involved. See "Investment Objective and Management Policies _
Management Policies" in the Statement of Additional Information for a further
discussion of certain risks.
FIXED-INCOME SECURITIES _ Even though interest-bearing securities are
investments which promise a stable stream of income, the prices of such
securities generally are inversely affected by changes in interest rates and,
therefore, are subject to the risk of market price fluctuations. The values
of fixed-income securities also may be affected by changes in the credit
rating or financial condition of the issuer. Certain securities purchased by
the Fund, such as those rated Baa by Moody's and BBB by S&P, Fitch and Duff,
may be subject to such risk with respect to the issuing entity and to greater
market fluctuations than certain lower yielding, higher rated fixed-income
securities. Once the rating of a portfolio security has been changed, the
Fund will consider all circumstances deemed relevant in determining whether
to continue to hold the security. See "Lower Rated Securities" and
"Appendix_Certain Portfolio Securities_Ratings" below and "Appendix" in the
Statement of Additional Information.
Page 5
LOWER RATED SECURITIES _ The Fund may invest up to 35% of its net assets in
higher yielding (and, therefore, higher risk) debt securities. These are
securities such as those rated Ba by Moody's or BB by S&P, Fitch or Duff or
as low as Caa by Moody's or CCC by S&P, Fitch or Duff (commonly known as junk
bonds). They generally are not meant for short-term investing and may be
subject to certain risks with respect to the issuing entity and to greater
market fluctuations than certain lower yielding, higher rated fixed-income
securities. The retail secondary market for these securities may be less
liquid than that of higher rated securities; adverse conditions could make it
difficult at times for the Fund to sell certain securities or could result in
lower prices than those used in calculating the Fund's net asset value. See
"Appendix _ Certain Portfolio Securities_Ratings."
FOREIGN SECURITIES _ Foreign securities markets generally are not as
developed or efficient as those in the United States. Securities of some
foreign issuers are less liquid and more volatile than securities of
comparable U.S. issuers. Similarly, volume and liquidity in most foreign
securities markets are less than in the United States and, at times,
volatility of price can be greater than in the United States.
Because evidences of ownership of such securities usually are held
outside the United States, the Fund will be subject to additional risks which
include possible adverse political and economic developments, possible
seizure or nationalization of foreign deposits and possible adoption of
governmental restrictions which might adversely affect the payment of
principal and interest on the foreign securities or might restrict the
payment of principal and interest to investors located outside the country of
the issuer, whether from currency blockage or otherwise.
Since foreign securities often are purchased with and payable in
currencies of foreign countries, the value of these assets as measured in
U.S. dollars may be affected favorably or unfavorably by changes in currency
rates and exchange control regulations.
FOREIGN CURRENCY EXCHANGE _ Currency exchange rates may fluctuate
significantly over short periods of time. They generally are determined by
the forces of supply and demand in the foreign exchange markets and the
relative merits of investments in different countries, actual or perceived
changes in interest rates and other complex factors, as seen from an
international perspective. Currency exchange rates also can be affected
unpredictably by intervention by U.S. or foreign governments or central
banks, or the failure to intervene, or by currency controls or political
developments in the United States or abroad. See "Appendix _ Investment
Techniques _ Foreign Currency Transactions."
USE OF DERIVATIVES _ The Fund may invest in derivatives ("Derivatives").
These are financial instruments which derive their performance, at least in
part, from the performance of an underlying asset, index or interest rate.
The Derivatives the Fund may use include mortgage-related securities and
asset-backed securities. While Derivatives can be used effectively in
furtherance of the Fund's investment objective, under certain market
conditions, they can increase the volatility of the Fund's net asset value,
can decrease the liquidity of the Fund's investments and make more difficult
the accurate pricing of the Fund's portfolio. See "Appendix _ Investment
Techniques _ Use of Derivatives" below and "Investment Objective and
Management Policies _ Management Policies _ Derivatives" in the Statement of
Additional Information.
NON-DIVERSIFIED STATUS _ The Fund's classification as a "non-diversified"
investment company means that the proportion of the Fund's assets that may be
invested in the securities of a single issuer is not limited by the 1940 Act.
A "diversified" investment company is required by the 1940 Act generally with
respect to 75% of its total assets, to invest not more than 5% of such assets
in the securities of a single issuer. Since a relatively high percentage of
the Fund's assets may be invested in the securities of a limited number of
issuers, some of which may be in the same industry, the Fund's portfolio may
be more sensitive to changes in the market value of a single issuer or
industry. However, to meet Federal tax requirements, at the close of each
quarter the Fund may not have more than 25% of its total assets invested in
any one issuer and, with respect to 50% of total assets, not more than 5% of
its total assets
Page 6
invested in any one issuer. The Fund may not invest more than 25% of its
assets in any one industry. These limitations do not apply to U.S. Government
securities.
SIMULTANEOUS INVESTMENTS _ Investment decisions for the Fund are made
independently from those of the other investment companies advised by The
Dreyfus Corporation. If, however, such other investment companies desire to
invest in, or dispose of, the same securities as the Fund, available
investments or opportunities for sales will be allocated equitably to each
investment company. In some cases, this procedure may adversely affect the
size of the position obtained for or disposed of by the Fund or the price
paid or received by the Fund.
MANAGEMENT OF THE FUND
INVESTMENT ADVISER _ The Dreyfus Corporation, located at 200 Park Avenue,
New York, New York 10166, was formed in 1947 and serves as the Fund's
investment adviser. The Dreyfus Corporation is a wholly-owned subsidiary of
Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Bank
Corporation ("Mellon"). As of September 30, 1995, The Dreyfus Corporation
managed or administered approximately $80 billion in assets for more than 1.8
million investor accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall
management of the Fund's affairs under a Management Agreement with the
Company, subject to the authority of the Company's Board in accordance with
Maryland law. The Fund's primary portfolio manager is Gerald E. Thunelius. He
has held that position since June 1994, and has been an employee of The
Dreyfus Corporation since May 1989. The Fund's other portfolio managers are
identified in the Statement of Additional Information. The Dreyfus Corporation
also provides research services for the Fund and for other funds advised by
The Dreyfus Corporation through a professional staff of portfolio managers
and securities analysts.
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international
markets. Mellon is among the twenty-five largest bank holding companies in
the United States based on total assets. Mellon's principal wholly-owned
subsidiaries are Mellon Bank, N.A., Mellon Bank (DE) National Association,
Mellon Bank (MD), The Boston Company, Inc., AFCO Credit Corporation and a
number of companies known as Mellon Financial Services Corporations. Through
its subsidiaries, including The Dreyfus Corporation, Mellon managed more than
$203 billion in assets as of September 30, 1995, including approximately $80
billion in proprietary mutual fund assets. As of September 30, 1995, Mellon,
through various subsidiaries, provided non-investment services, such as
custodial or administration services, for more than $717 billion in assets,
including approximately $55 billion in mutual fund assets.
Under the terms of the Management Agreement, the Fund has agreed to
pay The Dreyfus Corporation a monthly fee at the annual rate of .50 of 1% of
the value of the Fund's average daily net assets. From time to time, The
Dreyfus Corporation may waive receipt of its fees and/or voluntarily assume
certain expenses of the Fund, which would have the effect of lowering the
expense ratio of the Fund and increasing yield to investors. The Fund will
not pay The Dreyfus Corporation at a later time for any amounts it may waive,
nor will the Fund reimburse The Dreyfus Corporation for any amounts it may
assume. For the fiscal year ended July 31, 1995, the Fund paid The Dreyfus
Corporation a monthly management fee at the effective annual rate of .21 of
1% of the value of the Fund's average daily net assets pursuant to
undertakings by The Dreyfus Corporation.
The Dreyfus Corporation may pay the Fund's distributor for
shareholder services from The Dreyfus Corporation's own assets, including
past profits but not including the management fee paid by the Fund. The
Fund's distributor may use part or all of such payments to pay Service Agents
(as defined below) in respect of these services.
Page 7
DISTRIBUTOR _ The Fund's distributor is Premier Mutual Fund Services, Inc.
(the "Distributor"), located at One Exchange Place, Boston, Massachusetts
02109. The Distributor's ultimate parent is Boston Institutional Group, Inc.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN_ Dreyfus Transfer,
Inc., a wholly-owned subsidiary of The Dreyfus Corporation, One American
Express Plaza, Providence, Rhode Island 02903, is the Fund's Transfer and
Dividend Disbursing Agent (the "Transfer Agent"). The Bank of New York, 90
Washington Street, New York, New York 10286, is the Fund's Custodian.
HOW TO BUY FUND SHARES
Fund shares are sold without a sales charge. You may be charged a
nominal fee if you effect transactions in Fund shares through a securities
dealer, bank or other financial institution (collectively, "Service Agents").
Stock certificates are issued only upon your written request. No certificates
are issued for fractional shares. The Fund reserves the right to reject any
purchase order.
The minimum initial investment is $2,500, or $1,000 if you are a
client of a Service Agent which has made an aggregate minimum initial
purchase for its customers of $2,500. Subsequent investments must be at least
$100. However, the minimum initial investment for Dreyfus-sponsored Keogh
Plans, IRAs, SEP-IRAs and 403(b)(7) Plans with only one participant is $750,
with no minimum for subsequent purchases. Individuals who open an IRA also
may open a non-working spousal IRA with a minimum initial investment of $250.
Subsequent investments in a spousal IRA must be at least $250. The initial
investment must be accompanied by the Account Application. For full-time or
part-time employees of The Dreyfus Corporation or any of its affiliates or
subsidiaries, directors of The Dreyfus Corporation, Board members of a fund
advised by The Dreyfus Corporation, including members of the Company's Board,
or the spouse or minor child of any of the foregoing, the minimum initial
investment is $1,000. For full-time or part-time employees of The Dreyfus
Corporation or any of its affiliates or subsidiaries who elect to have a
portion of their pay directly deposited into their Fund account, the minimum
initial investment is $50. The Fund reserves the right to offer Fund shares
without regard to minimum purchase requirements to employees participating in
certain qualified or non-qualified employee benefit plans or other programs
where contributions or account information can be transmitted in a manner and
form acceptable to the Fund. The Fund reserves the right to vary further the
initial and subsequent investment minimum requirements at any time. Fund
shares also are offered without regard to the minimum initial investment
requirements through Dreyfus-AUTOMATIC Asset Builder, Dreyfus Government
Direct Deposit Privilege or Dreyfus Payroll Savings Plan pursuant to the
Dreyfus Step Program described under "Shareholder Services." These services
enable you to make regularly scheduled investments and may provide you with a
convenient way to invest for long-term financial goals. You should be aware,
however, that periodic investment plans do not guarantee a profit and will
not protect an investor against loss in a declining market.
You may purchase Fund shares by check or wire, or through the Dreyfus
TELETRANSFER Privilege described below. Checks should be made payable to "The
Dreyfus Family of Funds," or, if for Dreyfus retirement plan accounts, to
"The Dreyfus Trust Company, Custodian" and should specify that you are
investing in the Fund. Payments to open new accounts which are mailed should
be sent to The Dreyfus Family of Funds, P.O. Box 9387, Providence, Rhode
Island 02940-9387, together with your Account Application. For subsequent
investments, your Fund account number should appear on the check and an invest
ment slip should be enclosed and sent to The Dreyfus Family of Funds, P.O.
Box 105, Newark, New Jersey 07101-0105. For Dreyfus retirement plan accounts,
both initial and subsequent investments should be sent to The Dreyfus Trust
Company, Custodian, P.O. Box 6427, Providence, Rhode Island 02940-6427.
Neither initial nor subsequent investments should be made by third party
check. Purchase orders may be delivered in person only to a Dreyfus Financial
Center. THESE ORDERS WILL BE FORWARDED
Page 8
TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For the location
of the nearest Dreyfus Financial Center, please call one of the telephone
numbers listed under "General Information."
Wire payments may be made if your bank account is in a commercial
bank that is a member of the Federal Reserve System or any other bank having
a correspondent bank in New York City. Immediately available funds may be
transmitted by wire to The Bank of New York, DDA# 8900117028/Dreyfus
Investment Grade Bond Funds, Inc./Dreyfus Short Term Income Fund, for
purchase of Fund shares in your name. The wire must include your Fund account
number (for new accounts, your Taxpayer Identification Number ("TIN") should
be included instead), account registration and dealer number, if applicable.
If your initial purchase of Fund shares is by wire, you should call
1-800-645-6561 after completing your wire payment to obtain your Fund account
number. You should include your Fund account number on the Account
Application and promptly mail the Account Application to the Fund, as no
redemptions will be permitted until the Account Application is received. You
may obtain further information about remitting funds in this manner from your
bank. All payments should be made in U.S. dollars and, to avoid fees and
delays, should be drawn only on U.S. banks. A charge will be imposed if any
check used for investment in your account does not clear. The Fund makes
available to certain large institutions the ability to issue purchase
instructions through compatible computer facilities.
Subsequent investments also may be made by electronic transfer of
funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House member. You must direct the
institution to transmit immediately available funds through the Automated
Clearing House to The Bank of New York with instructions to credit your Fund
account. The instructions must specify your Fund account registration and
Fund account number PRECEDED BY THE DIGITS "1111."
Fund shares are sold on a continuous basis at the net asset value per
share next determined after an order in proper form is received by the
Transfer Agent or other agent. Net asset value per share is determined as of
the close of trading on the floor of the New York Stock Exchange (currently
4:00 p.m., New York time), on each day the New York Stock Exchange is open
for business. Net asset value per share is computed by dividing the value of
the Fund's net assets (i.e., the value of its assets less liabilities) by the
total number of Fund shares outstanding. The Fund's investments are valued
generally by using available market quotations or at fair value which may be
determined by one or more pricing services approved by the Company's Board.
Each pricing services, procedures are reviewed under the general supervision
of the Board. For further information regarding the methods employed in
valuing the Fund's investments, see "Determination of Net Asset Value" in the
Statement of Additional Information.
For certain institutions that have entered into agreements with the
Distributor, payment for the purchase of Fund shares may be transmitted, and
must be received by the Transfer Agent, within three business days after the
order is placed. If such payment is not received within three business days
after the order is placed, the order may be canceled and the institution
could be held liable for resulting fees and/or losses.
The Distributor may pay dealers a fee of up to .5% of the amount
invested through such dealers in Fund shares by employees participating in
qualified or non-qualified employee benefit plans or other programs where (i)
the employers or affiliated employers maintaining such plans or programs have
a minimum of 250 employees eligible for participation in such plans or
programs or (ii) such plan's or program's aggregate investment in the Dreyfus
Family of Funds or certain other products made available by the Distributor
to such plans or programs exceeds one million dollars ("Eligible Benefit
Plans"). All present holdings of shares of funds in the Dreyfus Family of
Funds by Eligible Benefit Plans will be aggregated to determine the fee
payable with respect to each purchase of Fund shares. The Distributor
reserves the right to cease paying these fees at any time. The Distributor
will pay such fees from its own funds, other than amounts received from the
Fund, including past profits or any other source available to it.
Page 9
Federal regulations require that you provide a certified TIN
upon opening or reopening an account. See "Dividends, Distributions and
Taxes" and the Account Application for further information concerning this
requirement. Failure to furnish a certified TIN to the Fund could subject you
to a $50 penalty imposed by the Internal Revenue Service (the "IRS").
DREYFUS TELETRANSFER PRIVILEGE _ You may purchase shares (minimum $500,
maximum $150,000 per day) by telephone if you have checked the appropriate
box and supplied the necessary information on the Account Application or have
filed a Shareholder Services Form with the Transfer Agent. The proceeds will
be transferred between the bank account designated in one of these documents
and your Fund account. Only a bank account maintained in a domestic financial
institution which is an Automated Clearing House member may be so designated.
The Fund may modify or terminate this Privilege at any time or charge a
service fee upon notice to shareholders. No such fee currently is
contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER purchase of shares by telephoning
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306.
SHAREHOLDER SERVICES
FUND EXCHANGES
You may purchase, in exchange for shares of the Fund, shares of
certain other funds managed or administered by The Dreyfus Corporation, to
the extent such shares are offered for sale in your state of residence. These
funds have different investment objectives which may be of interest to you.
If you desire to use this service, you should consult your Service Agent or
call 1-800-645-6561 to determine if it is available and whether any
conditions are imposed on its use.
To request an exchange, you must give exchange instructions to the
Transfer Agent in writing or by telephone. Before any exchange, you must
obtain and should review a copy of the current prospectus of the fund into
which the exchange is being made. Prospectuses may be obtained by calling
1-800-645-6561. Except in the case of personal retirement plans, the shares
being exchanged must have a current value of at least $500; furthermore, when
establishing a new account by exchange, the shares being exchanged must have
a value of at least the minimum initial investment required for the fund into
which the exchange is being made. The ability to issue exchange instructions
by telephone is given to all Fund shareholders automatically, unless you
check the applicable "No" box on the Account Application, indicating that you
specifically refuse this Privilege. The Telephone Exchange Privilege may be
established for an existing account by written request, signed by all
shareholders on the account, or by a separate signed Shareholder Services
Form, also available by calling 1-800-645-6561. If you have established the
Telephone Exchange Privilege, you may telephone exchange instructions by
calling 1-800-221-4060 or, if you are calling from overseas, call
1-401-455-3306. See "How to Redeem Shares_Procedures." Upon an exchange into
a new account, the following shareholder services and privileges, as
applicable and where available, will be automatically carried over to the
fund into which the exchange is made: Telephone Exchange Privilege, Check
Redemption Privilege, Wire Redemption Privilege, Telephone Redemption
Privilege, Dreyfus TELETRANSFER Privilege and the dividend/capital gain
distribution option (except for Dreyfus Dividend Sweep) selected by the
investor.
Shares will be exchanged at the next determined net asset value;
however, a sales load may be charged with respect to exchanges into funds
sold with a sales load. If you are exchanging into a fund that charges a
sales load, you may qualify for share prices which do not include the sales
load or which reflect a reduced sales load, if the shares of the fund from
which you are exchanging were: (a) purchased with a sales load, (b) acquired
by a previous exchange from shares purchased with a sales load, or (c)
acquired through reinvestment of dividends or distributions paid with respect
to the foregoing categories of shares. To qualify, at the time of the
exchange you must notify the Transfer Agent or your Service Agent must notify
the Distributor. Any such qualification is subject to confirmation of your
Page 10
holdings through a check of appropriate records. See "Shareholder Services"
in the Statement of Additional Information. No fees currently are charged
shareholders directly in connection with exchanges, although the Fund
reserves the right, upon not less than 60 days' written notice, to charge
shareholders a nominal fee in accordance with rules promulgated by the
Securities and Exchange Commission. The Fund reserves the right to reject any
exchange request in whole or in part. The availability of Fund Exchanges may
be modified or terminated at any time upon notice to shareholders. See
"Dividends, Distributions and Taxes."
DREYFUS AUTO-EXCHANGE PRIVILEGE
Dreyfus Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for shares of
the Fund, in shares of certain other funds in the Dreyfus Family of Funds of
which you are currently an investor. The amount you designate, which can be
expressed either in terms of a specific dollar or share amount ($100
minimum), will be exchanged automatically on the first and/or fifteenth day
of the month according to the schedule you have selected. Shares will be
exchanged at the then-current net asset value; however, a sales load may be
charged with respect to exchanges into funds sold with a sales load. See
"Shareholder Services" in the Statement of Additional Information. The right
to exercise this Privilege may be modified or canceled by the Fund or the
Transfer Agent. You may modify or cancel your exercise of this Privilege at
any time by mailing written notification to The Dreyfus Family of Funds, P.O.
Box 9671, Providence, Rhode Island 02940-9671. The Fund may charge a service
fee for the use of this Privilege. No such fee currently is contemplated. See
"Dividends, Distributions and Taxes." For more information concerning this
Privilege and the funds in the Dreyfus Family of Funds eligible to participate
in this Privilege, or to obtain a Dreyfus Auto-Exchange Authorization Form,
please call toll free 1-800-645-6561.
DREYFUS-AUTOMATIC ASSET BUILDERRegistration Mark
Dreyfus-AUTOMATIC Asset Builder permits you to purchase Fund shares
(minimum of $100 and maximum of $150,000 per transaction) at regular
intervals selected by you. Fund shares are purchased by transferring funds
from the bank account designated by you. At your option, the account
designated by you will be debited in the specified amount, and Fund shares
will be purchased, once a month, on either the first or fifteenth day, or
twice a month, on both days. Only an account maintained at a domestic
financial institution which is an Automated Clearing House member may be so
designated. To establish a Dreyfus-AUTOMATIC Asset Builder account, you must
file an authorization form with the Transfer Agent. You may obtain the
necessary authorization form by calling 1-800-645-6561. You may cancel your
participation in this Privilege or change the amount of purchase at any time
by mailing written notification to The Dreyfus Family of Funds, P.O. Box
9671, Providence, Rhode Island 02940-9671, or, if for Dreyfus retirement plan
accounts, to The Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence,
Rhode Island 02940-6427, and the notification will be effective three
business days following receipt. The Fund may modify or terminate this
Privilege at any time or charge a service fee. No such fee currently is
contemplated.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Dreyfus Government Direct Deposit Privilege enables you to purchase
Fund shares (minimum of $100 and maximum of $50,000 per transaction) by
having Federal salary, Social Security, or certain veterans', military or
other payments from the Federal government automatically deposited into your
Fund account. You may deposit as much of such payments as you elect. To
enroll in Dreyfus Government Direct Deposit, you must file with the Transfer
Agent a completed Direct Deposit Sign-Up Form for each type of payment that
you desire to include in this Privilege. The appropriate form may be obtained
by calling 1-800-645-6561. Death or legal incapacity will terminate your
participation in this Privilege. You may elect at any time to terminate your
participation by notifying in writing the appropriate Federal agency. The
Fund may terminate your participation upon 30 days' notice to you.
Page 11
DREYFUS PAYROLL SAVINGS PLAN
Dreyfus Payroll Savings Plan permits you to purchase Fund shares
(minimum of $100 per transaction) automatically on a regular basis. Depending
upon your employer's direct deposit program, you may have part or all of your
paycheck transferred to your existing Dreyfus account electronically through
the Automated Clearing House system at each pay period. To establish a
Dreyfus Payroll Savings Plan account, you must file an authorization form
with your employer's payroll department. Your employer must complete the
reverse side of the form and return it to The Dreyfus Family of Funds, P.O.
Box 9671, Providence, Rhode Island 02940-9671. You may obtain the necessary
authorization form by calling 1-800-645-6561. You may change the amount of
purchase or cancel the authorization only by written notification to your
employer. It is the sole responsibility of your employer, not the
Distributor, The Dreyfus Corporation, the Fund, the Transfer Agent or any
other person, to arrange for transactions under the Dreyfus Payroll Savings
Plan. The Fund may modify or terminate this Privilege at any time or charge a
service fee. No such fee currently is contemplated.
DREYFUS STEP PROGRAM
Dreyfus Step Program enables you to purchase Fund shares without
regard to the Fund's minimum initial investment requirements through
Dreyfus-AUTOMATIC Asset Builder, Dreyfus Government Direct Deposit Privilege
or Dreyfus Payroll Savings Plan. To establish a Dreyfus Step Program account,
you must supply the necessary information on the Account Application and file
the required authorization form(s) with the Transfer Agent. For more
information concerning this Program, or to request the necessary
authorization form(s), please call toll free 1-800-782-6620. You may
terminate your participation in this Program at any time by discontinuing
your participation in Dreyfus-AUTOMATIC Asset Builder, Dreyfus Government
Direct Deposit Privilege or Dreyfus Payroll Savings Plan, as the case may be,
as provided under the terms of such Privilege(s). The Fund may modify or
terminate this Program at any time. Investors who wish to purchase Fund
shares through the Dreyfus Step Program in conjunction with a
Dreyfus-sponsored retirement plan may do so only for IRAs, SEP-IRAs and IRA
"Rollover Accounts."
DREYFUS DIVIDEND OPTIONS
Dreyfus Dividend Sweep enables you to invest automatically dividends
or dividends and capital gain distributions, if any, paid by the Fund in
shares of another fund in the Dreyfus Family of Funds of which you are a
shareholder. Shares of the other fund will be purchased at the then-current
net asset value; however, a sales load may be charged with respect to
investments in shares of a fund sold with a sales load. If you are investing
in a fund that charges a sales load, you may qualify for share prices which
do not include the sales load or which reflect a reduced sales load. If you
are investing in a fund that charges a contingent deferred sales charge, the
shares purchased will be subject on redemption to the contingent deferred
sales charge, if any, applicable to the purchased shares. See "Shareholder
Services" in the Statement of Additional Information. Dreyfus Dividend ACH
permits you to transfer electronically dividends or dividends and capital
gain distributions, if any, from the Fund to a designated bank account. Only
an account maintained at a domestic financial institution which is an
Automated Clearing House member may be so designated. Banks may charge a fee
for this service.
For more information concerning these privileges or to request a
Dividend Options Form, please call toll free 1-800-645-6561. You may cancel
these privileges by mailing written notification to The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. To select a new
fund after cancellation, you must submit a new Dividend Options Form.
Enrollment in or cancellation of these privileges is effective three business
days following receipt. These privileges are available only for existing
accounts and may not be used to open new accounts. Minimum subsequent
investments do not apply for Dreyfus Dividend Sweep. The Fund may modify or
terminate these privileges at any time or charge a service fee. No such fee
currently is contemplated. Shares held under Keogh Plans, IRAs or other
retirement plans are not eligible for Dreyfus Dividend Sweep.
Page 12
AUTOMATIC WITHDRAWAL PLAN
The Automatic Withdrawal Plan permits you to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly
basis if you have a $5,000 minimum account. An application for the Automatic
Withdrawal Plan can be obtained by calling 1-800-645-6561. There is a service
charge of 50cents for each withdrawal check. The Automatic Withdrawal Plan
may be ended at any time by you, the Fund or the Transfer Agent. Shares for
which certificates have been issued may not be redeemed through the Automatic
Withdrawal Plan.
RETIREMENT PLANS
The Fund offers a variety of pension and profit-sharing plans,
including Keogh Plans, IRAs, SEP-IRAs and IRA "Rollover Accounts," 401(k)
Salary Reduction Plans and 403(b)(7) Plans. Plan support services also are
available. You can obtain details on the various plans by calling the
following numbers toll free: for Keogh Plans, please call 1-800-358-5566;
for IRAs and IRA "Rollover Accounts," please call 1-800-645-6561; for
SEP-IRAs, 401(k) Salary Reduction Plans and 403(b)(7) Plans, please call
1-800-322-7880.
HOW TO REDEEM SHARES
GENERAL
You may request redemption of your shares at any time. Redemption
requests should be transmitted to the Transfer Agent as described below. When
a request is received in proper form, the Fund will redeem the shares at the
next determined net asset value.
The Fund imposes no charges when shares are redeemed. Service Agents
may charge their clients a nominal fee for effecting redemptions of Fund
shares. Any certificates representing Fund shares being redeemed must be
submitted with the redemption request. The value of the shares redeemed may
be more or less than their original cost, depending upon the Fund's
then-current net asset value.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Securities and Exchange
Commission. HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY CHECK, BY DREYFUS
TELETRANSFER PRIVILEGE OR THROUGH DREYFUS-AUTOMATIC ASSET BUILDER AND
SUBSEQUENTLY SUBMIT A WRITTEN REDEMPTION REQUEST TO THE TRANSFER AGENT, THE
REDEMPTION PROCEEDS WILL BE TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE
OF YOUR PURCHASE CHECK, DREYFUS TELETRANSFER PURCHASE OR DREYFUS-AUTOMATIC
ASSET BUILDER ORDER, WHICH MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN
ADDITION, THE FUND WILL NOT HONOR REDEMPTION CHECKS UNDER THE CHECK
REDEMPTION PRIVILEGE, AND WILL REJECT REQUESTS TO REDEEM SHARES BY WIRE OR
TELEPHONE OR PURSUANT TO THE DREYFUS TELETRANSFER PRIVILEGE, FOR A PERIOD OF
EIGHT BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE
CHECK, THE DREYFUS TELETRANSFER PURCHASE OR THE DREYFUS-AUTOMATIC ASSET
BUILDER ORDER AGAINST WHICH SUCH REDEMPTION IS REQUESTED. THESE PROCEDURES
WILL NOT APPLY IF YOUR SHARES WERE PURCHASED BY WIRE PAYMENT, OR IF YOU
OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE IN YOUR ACCOUNT TO COVER THE
REDEMPTION REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS EFFECTIVE, DIVIDENDS
ON SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND YOU WILL BE ENTITLED TO
EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Fund shares will not be
redeemed until the Transfer Agent has received your Account Application.
The Fund reserves the right to redeem your account at its option upon
not less than 45 days' written notice if your account's net asset value is
$500 or less and remains so during the notice period.
PROCEDURES
You may redeem shares by using the regular redemption procedure
through the Transfer Agent, or, if you have checked the appropriate box and
supplied the necessary information on the Account Application or have filed a
Shareholder Services Form with the Transfer Agent, through the Check
Page 13
Redemption Privilege, the Wire Redemption Privilege, the Telephone Redemption
Privilege or the Dreyfus TELETRANSFER Privilege. Other redemption procedures
may be in effect for clients of certain Service Agents. The Fund makes
available to certain large institutions the ability to issue redemption
instructions through compatible computer facilities. The Fund reserves the
right to refuse any request made by wire or telephone, including requests
made shortly after a change of address, and may limit the amount involved or
the number of such requests. The Fund may modify or terminate any redemption
Privilege at any time or charge a service fee upon notice to shareholders. No
such fee currently is contemplated.
You may redeem shares by telephone if you have checked the
appropriate box on the Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select a telephone redemption
privilege or telephone exchange privilege (which is granted automatically
unless you refuse it), you authorize the Transfer Agent to act on telephone
instructions from any person representing himself or herself to be you, and
reasonably believed by the Transfer Agent to be genuine. The Fund will require
the Transfer Agent to employ reasonable procedures, such as requiring a form
of personal identification, to confirm that instructions are genuine and, if
it does not follow such procedures, the Fund or the Transfer Agent may be
liable for any losses due to unauthorized or fraudulent instructions. Neither
the Fund nor the Transfer Agent will be liable for following telephone
instructions reasonably believed to be genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or exchange of Fund shares. In such cases, you should
consider using the other redemption procedures described herein. Use of these
other redemption procedures may result in your redemption request being
processed at a later time than it would have been if telephone redemption had
been used. During the delay, the Fund's net asset value may fluctuate.
REGULAR REDEMPTION _ Under the regular redemption procedure, you may redeem
shares by written request mailed to The Dreyfus Family of Funds, P.O. Box
9671, Providence, Rhode Island 02940-9671. Redemption requests may be
delivered in person only to a Dreyfus Financial Center. THESE REQUESTS WILL
BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For
the location of the nearest Dreyfus Financial Center, please call one of the
telephone numbers listed under "General Information." Redemption requests
must be signed by each shareholder, including each owner of a joint account,
and each signature must be guaranteed. The Transfer Agent has adopted
standards and procedures pursuant to which signature-guarantees in proper form
generally will be accepted from domestic banks, brokers, dealers, credit
unions, national securities exchanges, registered securities associations,
clearing agencies and savings associations, as well as from participants in
the New York Stock Exchange Medallion Signature Program, the Securities
Transfer Agents Medallion Program ("STAMP") and the Stock Exchanges Medallion
Program. If you have any questions with respect to signature-guarantees,
please call one of the telephone numbers listed under "General Information."
Redemption proceeds of at least $1,000 will be wired to any member
bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
CHECK REDEMPTION PRIVILEGE _ You may write Redemption Checks drawn on your
Fund account. Redemption Checks may be made payable to the order of any
person in the amount of $500 or more. Potential fluctuations in the net asset
value of the Fund's shares should be considered in determining the amount of
the check. Redemption Checks should not be used to close your account.
Redemption Checks are free, but the Transfer Agent will impose a fee for
stopping payment of a Redemption Check upon your request or if the Transfer
Agent cannot honor a Redemption Check due to insufficient funds or other
valid reason. You should date your Redemption Checks with the current date
when you write them. Please do not postdate your Redemption Checks. If you
do, the Transfer Agent will honor upon presentment, even if presented before
the date of the check, all postdated Redemption Checks which are dated within
six months of presentment for payment, if they are otherwise in good order.
Shares for
Page 14
which certificates have been issued may not be redeemed by Redemption Check.
Shares held under Keogh Plans, IRAs or other Dreyfus retirement plans are not
eligible for this Privilege. This Privilege will be terminated immediately,
without notice, with respect to any account which is, or becomes, subject to
backup withholding on redemptions (see "Dividends, Distributions and Taxes").
Any Redemption Check written on an account which has become subject to backup
withholding on redemptions will not be honored by the Transfer Agent.
WIRE REDEMPTION PRIVILEGE _ You may request by wire or telephone that
redemption proceeds (minimum $1,000) be wired to your account at a bank which
is a member of the Federal Reserve System, or a correspondent bank if your
bank is not a member. You also may direct that redemption proceeds be paid by
check (maximum $150,000 per day) made out to the owners of record and mailed
to your address. Redemption proceeds of less than $1,000 will be paid
automatically by check. Holders of jointly registered Fund or bank accounts
may have redemption proceeds of not more than $250,000 wired within any
30-day period. You may telephone redemption requests by calling
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306. The
Statement of Additional Information sets forth instructions for transmitting
redemption requests by wire. Shares held under Keogh Plans, IRAs or other
retirement plans, and shares for which certificates have been issued, are not
eligible for this Privilege.
TELEPHONE REDEMPTION PRIVILEGE _ You may request by telephone that
redemption proceeds (maximum $150,000 per day) be paid by check and mailed to
your address. You may telephone redemption instructions by calling
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306.
Shares held under Keogh Plans, IRAs or other retirement plans, and shares for
which certificates have been issued, are not eligible for this Privilege.
DREYFUS TELETRANSFER PRIVILEGE _ You may request by telephone that
redemption proceeds (minimum $500 per day) be transferred between your Fund
account and your bank account. Only a bank account maintained in a domestic
financial institution which is an Automated Clearing House member may be
designated. Redemption proceeds will be on deposit in your account at an
Automated Clearing House member bank ordinarily two days after receipt of the
redemption request or, at your request, paid by check (maximum $150,000 per
day) and mailed to your address. Holders of jointly registered Fund or bank
accounts may redeem through the Dreyfus TELETRANSFER Privilege for transfer
to their bank account not more than $250,000 within any 30-day period.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER redemption of shares by telephoning
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306.
Shares held under Keogh Plans, IRAs or other retirement plans, and shares
issued in certificate form, are not eligible for this Privilege.
SHAREHOLDER SERVICES PLAN
The Fund has adopted a Shareholder Services Plan, pursuant to which
it pays the Distributor for the provision of certain services to Fund
shareholders a fee at the annual rate of .20 of 1% of the value of the Fund's
average daily net assets. The services provided may include personal services
relating to shareholder accounts, such as answering shareholder inquiries
regarding the Fund and providing reports and other information, and services
related to the maintenance of shareholder accounts. The Distributor may make
payments to Service Agents in respect of these services. The Distributor
determines the amounts to be paid to Service Agents.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Under the Internal Revenue Code of 1986, as amended (the "Code"), the
Fund is treated as a separate corporation for purposes of qualification and
taxation as a regulated investment company. The Fund ordinarily declares
dividends from its net investment income on each day the New York Stock
Exchange is open for business. Dividends usually are paid on the last
business day of each month. The
Page 15
Fund's earnings for Saturdays, Sundays and holidays are declared as dividends
on the next business day. If you redeem all shares in your account at any
time during the month, all dividends to which you are entitled will be paid
to you along with the proceeds of the redemption. If you are an omnibus
accountholder and indicate in a partial redemption request that a portion of
any accrued dividends to which such account is entitled belongs to an
underlying accountholder who has redeemed all shares in his or her account,
such portion of the accrued dividends will be paid to you along with the
proceeds of the redemption. Distributions from net realized securities gains,
if any, generally are declared and paid once a year, but the Fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Code, in all events in a manner consistent with the
provisions of the 1940 Act. The Fund will not make distributions from net
realized securities gains unless capital loss carryovers, if any, have been
utilized or have expired. You may choose whether to receive dividends and
distributions in cash or to reinvest in additional shares at net asset value.
All expenses are accrued daily and deducted before declaration of dividends
to investors.
Dividends derived from net investment income, together with
distributions from net realized short-term securities gains and all or a
portion of any gains realized from the sale or other disposition of certain
market discount bonds, paid by the Fund will be taxable to U.S. shareholders
as ordinary income whether received in cash or reinvested in additional
shares. No dividend paid by the Fund will qualify for the dividends received
deduction allowable to certain U.S. corporations. Distributions from net
realized long-term securities gains of the Fund will be taxable to U.S.
shareholders as long-term capital gains for Federal income tax purposes,
regardless of how long shareholders have held their Fund shares and whether
such distributions are received in cash or reinvested in Fund shares. The
Code provides that the net capital gain of an individual generally will not
be subject to Federal income tax at a rate in excess of 28%. Dividends and
distributions may be subject to state and local taxes.
Dividends derived from net investment income, together with
distributions from net realized short-term securities gains and all or a
portion of any gains realized from the sale or other disposition of certain
market discount bonds, paid by the Fund to a foreign investor generally are
subject to U.S. nonresident withholding taxes at the rate of 30%, unless the
foreign investor claims the benefit of a lower rate specified in a tax
treaty. Distributions from net realized long-term securities gains paid by
the Fund to a foreign investor as well as the proceeds of any redemptions
from a foreign investor's account, regardless of the extent to which gain or
loss may be realized, generally will not be subject to U.S. nonresident
withholding tax. However, such distributions may be subject to backup
withholding, as described below, unless the foreign investor certifies his
non-U.S. residency status.
The exchange of shares of one fund for shares of another is treated
for Federal income tax purposes as a sale of the shares given in exchange by
the shareholder and, therefore, an exchanging shareholder may realize a
taxable gain or loss.
Notice as to the tax status of your dividends and distributions will
be mailed to you annually. You also will receive periodic summaries of your
account which will include information as to dividends and distributions from
securities gains, if any, paid during the year.
Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of dividends, distributions
from net realized securities gains and the proceeds of any redemption,
regardless of the extent to which gain or loss may be realized, paid to a
shareholder if such shareholder fails to certify either that the TIN
furnished in connection with opening an account is correct or that such
shareholder has not received notice from the IRS of being subject to backup
withholding as a result of a failure to properly report taxable dividend or
interest income on a Federal income tax return. Furthermore, the IRS may
notify the Fund to institute backup withholding if the IRS determines a
shareholder's TIN is incorrect or if a shareholder has failed to properly
report taxable dividend and interest income on a Federal income tax return.
Page 16
A TIN is either the Social Security number or employer identification
number of the record owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax imposed on the
record owner of the account, and may be claimed as a credit on the record
owner's Federal income tax return.
Management of the Fund believes that the Fund has qualified for the
fiscal year ended July 31, 1995 as a "regulated investment company" under the
Code. The Fund intends to continue to so qualify so long as such
qualification is in the best interests of its shareholders. Such
qualification relieves the Fund of any liability for Federal income tax to
the extent its earnings are distributed in accordance with applicable
provisions of the Code. The Fund is subject to a non-deductible 4% excise
tax, measured with respect to certain undistributed amounts of taxable
investment income and capital gains.
You should consult your tax adviser regarding specific questions as
to Federal, state or local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance may be calculated on several
bases, including current yield, average annual total return and/or total
return.
Current yield refers to the Fund's annualized net investment income
per share over a 30-day period, expressed as a percentage of the net asset
value per share at the end of the period. For purposes of calculating current
yield, the amount of net investment income per share during that 30-day
period, computed in accordance with regulatory requirements, is compounded by
assuming that it is reinvested at a constant rate over a six-month period. An
identical result is then assumed to have occurred during a second six-month
period which, when added to the result for the first six months, provides an
"annualized" yield for an entire one-year period. Calculations of current
yield may reflect absorbed expenses pursuant to any undertaking that may be
in effect. See "Management of the Fund."
Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment was purchased with an initial
payment of $1,000 and that the investment was redeemed at the end of a stated
period of time, after giving effect to the reinvestment of dividends and
distributions during the period. The return is expressed as a percentage rate
which, if applied on a compounded annual basis, would result in the
redeemable value of the investment at the end of the period. Advertisements
of the Fund's performance will include the Fund's average annual total return
for one, five and ten year periods, or for shorter periods depending upon the
length of time during which the Fund has operated.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the income
and principal changes for a specified period and dividing by the net asset
value per share at the beginning of the period. Advertisements may include
the percentage rate of total return or may include the value of a
hypothetical investment at the end of the period which assumes the
application of the percentage rate of total return.
Performance will vary from time to time and past results are not
necessarily representative of future results. You should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a
basis for comparison with other investments or other investment companies
using a different method of calculating performance.
Comparative performance information may be used from time to time in
advertising or marketing the Fund's shares, including data from Lipper
Analytical Services, Inc., Moody's Bond Survey Bond Index, Bond Buyer's
20-Bond Index, Morningstar, Inc. and other industry publications. The Fund's
yield should generally be higher than money market funds (the Fund, however,
does not seek to main-
Page 17
tain a stabilized price per share and may not be able to return an investors'
principal), and its price per share should fluctuate less than long term bond
funds (which generally have somewhat higher yields).
GENERAL INFORMATION
The Company was incorporated under Maryland law on June 26, 1992, and
commenced operations on August 18, 1992. Before November 8, 1995, the
Company's name was Dreyfus Short-Term Income Fund, Inc. The Company is
authorized to issue one billion shares of Common Stock (with 500 million
shares allocated to the Fund), par value $.001 per share. Each share has one
vote.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Fund to hold annual meetings of shareholders. As a result,
Fund shareholders may not consider each year the election of Board members or
the appointment of auditors. However, pursuant to the Company's By-Laws, the
holders of at least 10% of the shares outstanding and entitled to vote may
require the Company to hold a special meeting of shareholders for purposes of
removing a Board member from office or for any other purpose. Shareholders
may remove a Board member by the affirmative vote of a majority of the
Company's outstanding voting shares. In addition, the Board will call a
meeting of shareholders for the purpose of electing Board members if, at any
time, less than a majority of the Board members then holding office have been
elected by shareholders.
The Company is a "series fund," which is a mutual fund divided into
separate portfolios, each of which is treated as a separate entity for
certain matters under the 1940 Act and for other purposes. A shareholder of
one portfolio is not deemed to be a shareholder of any other portfolio. For
certain matters shareholders vote together as a group; as to others they vote
separately by portfolio. By this Prospectus, shares of the Fund are being
offered. Other portfolios are sold pursuant to other offering documents.
To date, the Board has authorized the creation of two series of
shares. All consideration received by the Company for shares of one of the
series and all assets in which such consideration is invested will belong to
that series (subject only to the rights of creditors of the Company) and will
be subject to the liabilities related thereto. The income attributable to,
and the expenses of, one series are treated separately from those of the
other series. The Company has the ability to create, from time to time, new
series without shareholder approval.
The Transfer Agent maintains a record of your ownership and sends you
confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, or by calling toll free
1-800-645-6561. In New York City, call 1-718-895-1206; outside the U.S.
and Canada, call 516-794-5452.
Page 18
APPENDIX
INVESTMENT TECHNIQUES
FOREIGN CURRENCY TRANSACTIONS _ Foreign currency transactions may be entered
into for a variety of purposes, including: to fix in U.S. dollars, between
trade and settlement date, the value of a security the Fund has agreed to buy
or sell; or to hedge the U.S. dollar value of securities the Fund already
owns, particularly if it expects a decrease in the value of the currency in
which the foreign security is denominated; or to gain exposure to the foreign
currency in an attempt to realize gains.
Foreign currency transactions may involve, for example, the Fund's
purchase of foreign currencies for U.S. dollars or the maintenance of short
positions in foreign currencies, which would involve the Fund agreeing to
exchange an amount of a currency it did not currently own for another
currency at a future date in anticipation of a decline in the value of the
currency sold relative to the currency the Fund contracted to receive in the
exchange. The Fund's success in these transactions will depend principally on
The Dreyfus Corporation's ability to predict accurately the future exchange
rates between foreign currencies and the U.S. dollar.
LEVERAGE _ Leveraging will exaggerate the effect on net asset value of any
increase or decrease in the market value of the Fund's portfolio. Money
borrowed for leveraging will be limited to 331/3% of the value of the Fund's
total assets. These borrowings will be subject to interest costs which may or
may not be recovered by appreciation of the securities purchased; in certain
cases, interest costs may exceed the return received on the securities
purchased.
The Fund may enter into reverse repurchase agreements with banks,
brokers or dealers. This form of borrowing involves the transfer by the Fund
of an underlying debt instrument in return for cash proceeds based on a
percentage of the value of the security. The Fund retains the right to
receive interest and principal payments on the security. At an agreed upon
future date, the Fund repurchases the security at principal plus accrued
interest. Except for these transactions, the Fund's borrowings generally will
be unsecured.
USE OF DERIVATIVES _ Derivatives can be volatile and involve various types
and degrees of risk, depending upon the characteristics of the particular
Derivative and the portfolio as a whole. Derivatives permit the Fund to
increase, decrease or change the level of risk to which its portfolio is
exposed in much the same way as the Fund can increase, decrease or change the
risk of its portfolio by making investments in specific securities.
In addition, Derivatives may entail investment exposures that are
greater than their cost would suggest, meaning that a small investment in
Derivatives could have a large potential impact on the Fund's performance.
If the Fund invests in Derivatives at inappropriate times or judges
market conditions incorrectly, such investments may lower the Fund's return
or result in a loss. The Fund also could experience losses if it were unable
to liquidate its position because of an illiquid secondary market. The market
for many Derivatives is, or suddenly can become, illiquid. Changes in
liquidity may result in significant, rapid and unpredictable changes in the
prices for Derivatives.
LENDING PORTFOLIO SECURITIES _ The Fund may lend securities from its
portfolio to brokers, dealers and other financial institutions needing to
borrow securities to complete certain transactions. In connection with such
loans, the Fund continues to be entitled to payments in amounts equal to the
interest or other distributions payable on the loaned securities. Loans of
portfolio securities afford the Fund an opportunity to earn interest on the
amount of the loan and at the same time to earn income on the loaned
securities' collateral. Loans of portfolio securities may not exceed 331/3%
of the value of the Fund's total assets. In connection with such loans, the
Fund will receive collateral consisting of cash, U.S. Government securities
or irrevocable letters of credit which will be maintained at all times in an
amount equal to at least
Page 19
100% of the current market value of the loaned securities. Such loans are
terminable by the Fund at any time upon specified notice. The Fund might
experience risk of loss if the institution with which it has engaged in a
portfolio loan transaction breaches its agreement with the Fund.
FORWARD COMMITMENTS _ The Fund may purchase securities on a forward
commitment or when-issued basis, which means that delivery and payment take
place a number of days after the date of the commitment to purchase. The
payment obligation and the interest rate that will be received on a forward
commitment or when-issued security are fixed at the time the Fund enters into
the commitment. However, the Fund does not make a payment until it receives
delivery from the other party to the transaction. The Fund will make
commitments to purchase such securities only with the intention of actually
acquiring the securities, but the Fund may sell these securities before the
settlement date if it is deemed advisable. A segregated account of the Fund
consisting of cash, cash equivalents or U.S. Government securities or other
high quality liquid debt securities at least equal at all times to the amount
of the commitments will be established and maintained at the Fund's custodian
bank.
CERTAIN PORTFOLIO SECURITIES
MORTGAGE-RELATED SECURITIES _ Mortgage-related securities are a form of
Derivative collateralized by pools of mortgages assembled for sale to
investors by various governmental agencies, such as the Government National
Mortgage Association and government-related organizations such as the Federal
National Mortgage Association and the Federal Home Loan Mortgage Corporation,
as well as by private issuers such as commercial banks, savings and loan
institutions, mortgage banks and private mortgage insurance companies, and
similar foreign entities. The mortgage-related securities which may be
purchased include those with fixed, floating and variable interest rates,
those with interest rates that change based on multiples of changes in
interest rates and those with interest rates that change inversely to changes
in interest rates, as well as stripped mortgage-backed securities. Stripped
mortgage-backed securities usually are structured with two classes that
receive different proportions of interest and principal distributions on a
pool of mortgage-backed securities or whole loans. A common type of stripped
mortgage-backed security will have one class receiving some of the interest
and most of the principal from the mortgage collateral, while the other class
will receive most of the interest and the remainder of the principal.
Although certain mortgage-related securities are guaranteed by a third party
or otherwise similarly secured, the market value of the security, which may
fluctuate, is not secured. If a mortgage-related security is purchased at a
premium, all or part of the premium may be lost if there is a decline in the
market value of the security, whether resulting from changes in interest
rates or prepayments on the underlying mortgage collateral. As with other
interest-bearing securities, the prices of certain of these securities are
inversely affected by changes in interest rates. However, although the value
of a mortgage-related security may decline when interest rates rise, the
converse is not necessarily true, since in periods of declining interest
rates the mortgages underlying the security are more likely to be prepaid.
For this and other reasons, a mortgage-related security's stated maturity may
be shortened by unscheduled prepayments on the underlying mortgages, and,
therefore, it is not possible to predict accurately the security's return to
the Fund. Moreover, with respect to stripped mortgage-backed securities, if
the underlying mortgage securities experience greater than anticipated
prepayments of principal, the Fund may fail to fully recoup its initial
investment even if the securities are rated in the highest rating category by
a nationally recognized statistical rating organization. For further
discussion concerning the investment considerations involved, see
"Description of the Fund _ Investment Considerations and Risks _ Fixed-Income
Securities" and "Illiquid Securities" below.
ASSET-BACKED SECURITIES _ Asset-backed securities are a form of Derivative.
The securitization techniques used for asset-backed securities are similar to
those used for mortgage-related securities. The collateral for these
securities has included home equity loans, automobile and credit card
receivables, boat
Page 20
loans, computer leases, airplane leases, mobile home loans, recreational
vehicle loans and hospital account receivables. The Fund may invest in these
and other types of asset-backed securities that may be developed in the
future.
Asset-backed securities present certain risks that are not presented
by mortgage-backed securities. Primarily, these securities may provide the
Fund with a less effective security interest in the related collateral than
do mortgage-backed securities. Therefore, there is the possibility that
recoveries on the underlying collateral may not, in some cases, be available
to support payments on these securities.
MUNICIPAL OBLIGATIONS _ Municipal obligations are debt obligations issued by
states, territories and possessions of the United States and the District of
Columbia and their political subdivisions, agencies and instrumentalities, or
multistate agencies or authorities. Municipal obligations bear fixed,
floating or variable rates of interest. Certain municipal obligations are
subject to redemption at a date earlier than their stated maturity pursuant
to call options, which may be separated from the related municipal
obligations and purchased and sold separately. The Fund also may acquire call
options on specific municipal obligations. The Fund generally would purchase
these call options to protect the Fund from the issuer of the related
municipal obligation redeeming, or other holder of the call option from
calling away, the municipal obligation before maturity.
While, in general, municipal obligations are tax exempt securities
having relatively low yields as compared to taxable, non-municipal
obligations of similar quality, certain municipal obligations are taxable
obligations, offering yields comparable to, and in some cases greater than,
the yields available on other permissible Fund investments. Dividends
received by shareholders on Fund shares which are attributable to interest
income received by the Fund from municipal obligations generally will be
subject to Federal income tax. The Fund will invest in municipal obligations,
the ratings of which correspond with the ratings of other permissible Fund
investments. The Fund currently intends to invest no more than 25% of its
assets in municipal obligations. However, this percentage may be varied from
time to time without shareholder approval.
ZERO COUPON SECURITIES _ The Fund may invest in zero coupon U.S. Treasury
securities, which are Treasury Notes and Bonds that have been stripped of
their unmatured interest coupons, the coupons themselves and receipts or
certificates representing interests in such stripped debt obligations and
coupons. Zero coupon securities also are issued by corporations and financial
institutions which constitute a proportionate ownership of the issuer's pool
of underlying U.S. Treasury securities. A zero coupon security pays no
interest to its holder during its life and is sold at a discount to its face
value at maturity. The amount of the discount fluctuates with the market
price of the security. The market prices of zero coupon securities generally
are more volatile than the market prices of securities that pay interest
periodically and are likely to respond to a greater degree to changes in
interest rates than non-zero coupon securities having similar maturities and
credit qualities.
MONEY MARKET INSTRUMENTS _ The Fund may invest, in the circumstances
described under "Description of the Fund_Management Policies," in the
following types of money market instruments.
U.S. GOVERNMENT SECURITIES. Securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities include U.S. Treasury
securities that differ in their interest rates, maturities and times of
issuance. Some obligations issued or guaranteed by U.S. Government agencies
and instrumentalities are supported by the full faith and credit of the U.S.
Treasury; others, by the right of the issuer to borrow from the Treasury;
others, by discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others, only by the credit
of the agency or instrumentality. These securities bear fixed, floating or
variable rates of interest. While the U.S. Government provides financial
support to such U.S. Government-sponsored agencies and instrumentalities, no
assurance can be given that it will always do so since it is not so obligated
by law.
Page 21
REPURCHASE AGREEMENTS. In a repurchase agreement, the Fund buys, and
the seller agrees to repurchase, a security at a mutually agreed upon time
and price (usually within seven days). The repurchase agreement thereby
determines the yield during the purchaser's holding period, while the
seller's obligation to repurchase is secured by the value of the underlying
security. Repurchase agreements could involve risks in the event of a default
or insolvency of the other party to the agreement, including possible delays
or restrictions upon the Fund's ability to dispose of the underlying
securities. The Fund may enter into repurchase agreements with certain banks
or non-bank dealers.
BANK OBLIGATIONS. The Fund may purchase certificates of deposit, time
deposits, bankers' acceptances and other short-term obligations issued by
domestic banks, foreign subsidiaries or foreign branches of domestic banks,
domestic and foreign branches of foreign banks, domestic savings and loan
associations and other banking institutions. With respect to such securities
issued by foreign subsidiaries or foreign branches of domestic banks, and
domestic and foreign branches of foreign banks, the Fund may be subject to
additional investment risks that are different in some respects from those
incurred by a fund which invests only in debt obligations of U.S. domestic
issuers.
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period
of time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time (in no event longer than seven
days) at a stated interest rate.
Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments reflect
the obligation both of the bank and the drawer to pay the face amount of the
instrument upon maturity. The other short-term obligations may include
uninsured, direct obligations bearing fixed, floating or variable interest
rates.
COMMERCIAL PAPER. Commercial paper consists of short-term, unsecured
promissory notes issued to finance short-term credit needs. The commercial
paper purchased by the Fund will consist only of direct obligations which, at
the time of their purchase, are (a) rated not lower than Prime-1 by Moody's,
A-1 by S&P, F-1 by Fitch or Duff-1 by Duff, (b) issued by companies having an
outstanding unsecured debt issue currently rated at least A3 by Moody's or A-
by S&P, Fitch or Duff or (c) if unrated, determined by The Dreyfus Corporation
to be of comparable quality to those rated obligations which may be
purchased by the Fund.
ILLIQUID SECURITIES _ The Fund may invest up to 15% of the value of its net
assets in securities as to which a liquid trading market does not exist,
provided such investments are consistent with the Fund's investment
objective. Such securities may include securities that are not readily
marketable, such as certain securities that are subject to legal or
contractual restrictions on resale, and repurchase agreements providing for
settlement in more than seven days after notice. As to these securities, the
Fund is subject to a risk that should the Fund desire to sell them when a
ready buyer is not available at a price the Fund deems representative of
their value, the value of the Fund's net assets could be adversely affected.
RATINGS _ Securities rated Ba by Moody's are judged to have speculative
elements; their future cannot be considered as well assured and often the
protection of interest and principal payments may be very moderate.
Securities rated BB by S&P, Fitch or Duff are regarded as having
predominantly speculative characteristics and, while such obligations have
less near-term vulnerability to default than other speculative grade debt,
they face major ongoing uncertainties or exposure to adverse business,
financial or economic conditions which could lead to inadequate capacity to
meet timely interest and principal payments. Securities rated Caa by Moody's
are of poor standing and may be in default or there may be present elements
of danger with respect to principal or interest. S&P, Fitch and Duff
typically assign a CCC rating to debt which has a current identifiable
vulnerability to default and is dependent upon favorable business, financial
and economic conditions to meet timely payments of interest and repay-
Page 22
ment of principal. Such securities, though high yielding, are characterized
by great risk. See "Appendix" in the Statement of Additional Information
for a general description of securities ratings.
The ratings of Moody's, S&P, Fitch and Duff represent their opinions
as to the quality of the obligations which they undertake to rate. Ratings
are relative and subjective and, although ratings may be useful in evaluating
the safety of interest and principal payments, they do not evaluate the
market value risk of such obligations. Although these ratings may be an
initial criterion for selection of portfolio investments, The Dreyfus
Corporation also will evaluate these securities and the ability of the issuers
of such securities to pay interest and principal. The Fund's ability to
achieve its investment objective may be more dependent on The Dreyfus
Corporation's credit analysis than might be the case for a fund that invested
in higher rated securities.
The average distribution of investments in corporate bonds by ratings
for the fiscal year ended July 31, 1995, calculated monthly on a dollar
weighted basis, was as follows:
MOODY'S OR S&P, FITCH OR DUFF PERCENTAGE
- ------------- ------------- --------
Aaa AAA 27.9%
Aa AA 8.9
A A 30.4
Baa BBB 23.4
Ba BB 4.9
B B 3.1
NR NR .9*
-----
99.5%**
=======
The actual distribution of the Fund's corporate bond investments by
ratings on any given date will vary. In addition, the distribution of the
Fund's investments by ratings as set forth above should not be considered as
representative of the Fund's future portfolio composition.
- ----------------
* These unrated securities have been determined by The Dreyfus
Corporation to be of comparable quality to securities rated B.
** Approximately .5% of the Fund's assets were invested in cash or cash
equivalents.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
Page 23
DREYFUS
Short Term
Income
Fund
Prospectus
(LION LOGO)
Copy Rights 1995 Dreyfus Service Corporation
083p5120195
Registration Mark
__________________________________________________________________________
PROSPECTUS DECEMBER 1, 1995
__________________________________________________________________________
DREYFUS INTERMEDIATE TERM INCOME FUND
__________________________________________________________________________
Dreyfus Intermediate Term Income Fund (the "Fund") is a
separate diversified portfolio of Dreyfus Investment Grade Bond Funds,
Inc., an open-end, management investment company (the "Company"), known as
a mutual fund. The Fund's investment objective is to provide you with as
high a level of current income as is consistent with the preservation of
capital. The Fund will invest principally in a broad range of investment
grade debt securities of domestic and foreign issuers and expects to
maintain a duration of five years or less and a dollar-weighted average
portfolio maturity ranging between three and ten years.
You can invest, reinvest or redeem shares at any time
without charge or penalty.
The Fund provides free redemption checks, which you can use
in amounts of $500 or more for cash or to pay bills. You continue to earn
income on the amount of the check until it clears. You can purchase or
redeem shares by telephone using Dreyfus TeleTransfer.
The Dreyfus Corporation will professionally manage the
Fund's portfolio.
This Prospectus sets forth concisely information about the
Fund that you should know before investing. It should be read and
retained for future reference.
The Statement of Additional Information, dated December 1,
1995, which may be revised from time to time, provides a further
discussion of certain areas in this Prospectus and other matters which may
be of interest to some investors. It has been filed with the Securities
and Exchange Commission and is incorporated herein by reference. For a
free copy, write to the Fund at 144 Glenn Curtiss Boulevard, Uniondale,
New York 11556-0144, or call 1-800-645-6561. When telephoning, ask for
Operator 144.
Mutual fund shares are not deposits or obligations of, or
guaranteed or endorsed by, any bank, and are not federally insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board or any
other agency. The net asset value of funds of this type will fluctuate
from time to time.
TABLE OF CONTENTS
Page
Annual Fund Operating Expenses . . . . . . .
Description of the Fund. . . . . . . . . . .
Management of the Fund . . . . . . . . . . .
How to Buy Shares. . . . . . . . . . . . . .
Shareholder Services . . . . . . . . . . . .
How to Redeem Shares . . . . . . . . . . . .
Shareholder Services Plan. . . . . . . . . .
Dividends, Distributions and Taxes . . . . .
Performance Information. . . . . . . . . . .
General Information. . . . . . . . . . . . .
Appendix . . . . . . . . . . . . . . . . . .
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees . . . . . . . . . . . . . .75%
Other Expenses. . . . . . . . . . . . . . .45%
Total Fund Operating
Expenses. . . . . . . . . . . . . . . . 1.20%
Example:
You would pay the following
expenses on a $1,000
investment, assuming (1) 5% 1 Year 3 Years
annual return and (2) redemption
at the end of each time period: $12 $38
The amounts listed in the example should not be considered
as representative of future expenses and actual expenses may be greater or
less than those indicated. Moreover, while the example assumes a 5%
annual return, the Fund's actual performance will vary and may result in
an actual return greater or less than 5%.
The purpose of the foregoing table is to assist you in
understanding the costs and expenses borne by the Fund, the payment of
which will reduce investors' annual return. Other Expenses are based on
estimated amounts for the current fiscal year. The information in the
foregoing table does not reflect any fee waivers or expense reimbursement
arrangements that may be in effect. You can purchase Fund shares without
charge directly from the Fund's distributor; you may be charged a nominal
fee if you effect transactions in Fund shares through a securities dealer,
bank or other financial institution. For a further description of the
various costs and expenses incurred in the operation of the Fund, as well
as expense reimbursement or waiver arrangements, see "Management of the
Fund," "How to Buy Shares" and "Shareholder Services Plan."
DESCRIPTION OF THE FUND
Investment Objective
The Fund's investment objective is to provide you with as
high a level of current income as is consistent with the preservation of
capital. It cannot be changed without approval by the holders of a
majority (as defined in the Investment Company Act of 1940, as amended
(the "1940 Act")) of the Fund's outstanding voting shares. There can be
no assurance that the Fund's investment objective will be achieved.
Management Policies
Under normal market conditions, the Fund will invest at
least 65% of the value of its net assets in investment grade debt
securities and securities with debt-like characteristics of domestic and
foreign issuers. These securities include bonds, debentures, notes, money
market instruments, mortgage-related securities, asset-backed securities,
municipal obligations, convertible debt obligations and convertible
preferred stock. See "Appendix--Certain Portfolio Securities." The
issuers may include domestic and foreign corporations, partnerships or
trusts, and governments or their political subdivisions, agencies or
instrumentalities. The Fund may invest up to 15% of the value of its
total assets in securities of foreign issuers, including securities of
companies whose principal activities are in, or governments of, emerging
markets. Under normal market conditions, the Fund will invest in a
portfolio of securities with a duration of five years or less and a
dollar-weighted average maturity ranging between three and ten years.
Investment grade debt securities are those rated at least
Baa by Moody's Investors Service, Inc. ("Moody's") or at least BBB by
Standard & Poor's Ratings Group, a division of The McGraw Hill Companies,
Inc. ("S&P"), Fitch Investors Service, L.P. ("Fitch") or Duff & Phelps
Credit Rating Co. ("Duff") or, if unrated, deemed to be of comparable
quality by The Dreyfus Corporation. Debt securities rated Baa by Moody's
and BBB by S&P, Fitch and Duff are considered investment grade obligations
which lack outstanding investment characteristics and may have speculative
characteristics as well. The Fund may invest up to 35% of the value of
its net assets in debt securities rated lower than Baa by Moody's and BBB
by S&P, Fitch and Duff and as low as Caa by Moody's and CCC by S&P, Fitch
and Duff, or, if unrated, deemed to be of comparable quality by The
Dreyfus Corporation. Securities rated Caa by Moody's and CCC by S&P,
Fitch and Duff are considered to have predominantly speculative
characteristics with respect to capacity to pay interest and repay
principal and to be of poor standing. The Fund intends to invest less
than 35% of its net assets in debt securities rated lower than investment
grade or, if unrated, deemed to be of comparable quality by The Dreyfus
Corporation. See "Investment Considerations and Risks--Lower Rated
Securities" below for a discussion of certain risks, and "Appendix" in the
Statement of Additional Information.
Under normal market conditions, the Fund will seek to
provide performance results that equal or exceed the Lehman Brothers
Aggregate Bond Index (the "Index"), which is a broad investment grade bond
index that measures the total investment return (capital change plus
income) provided by a universe of over 6,000 fixed-income securities,
weighted by the market value outstanding of each security. As of
, 1995, the effective duration of the securities comprising the Index
was approximately ___ years and their weighted average maturity was
approximately ___ years.
Duration is a means of assessing the price volatility
associated with changes in interest rates. Generally, the longer the
duration, the more volatility an investor should expect. For example, the
market price of a bond with a duration of five years would be expected to
decline 5% if interest rates rose 1%. Conversely, the market price of the
same bond would be expected to increase 5% if interest rates fell 1%. The
market price of a bond with a duration of ten years would be expected to
increase or decline twice as much as the market price of a bond with a
five-year duration.
The Fund's annual portfolio turnover rate is not expected
to exceed 100%. The Fund may engage in various investment techniques,
such as foreign currency transactions, options and futures transactions,
leveraging, short-selling and lending portfolio securities. See
"Investment Considerations and Risks" and "Appendix--Investment
Techniques" below and "Investment Objective and Management Policies--
Management Policies" in the Statement of Additional Information.
Investment Considerations and Risks
General--The Fund's net asset value per share should be expected to
fluctuate. Investors should consider the Fund as a supplement to an
overall investment program and should invest only if they are willing to
undertake the risks involved. See "Investment Objective and Management
Policies--Management Policies" in the Statement of Additional Information
for a further discussion of certain risks.
Fixed-Income Securities--Even though interest-bearing securities are
investments which promise a stable stream of income, the prices of such
securities generally are inversely affected by changes in interest rates
and, therefore, are subject to the risk of market price fluctuations. The
values of fixed-income securities also may be affected by changes in the
credit rating or financial condition of the issuer. Certain securities
purchased by the Fund, such as those rated Baa by Moody's and BBB by S&P,
Fitch and Duff, may be subject to such risk with respect to the issuing
entity and to greater market fluctuations than certain lower yielding,
higher rated fixed-income securities. Once the rating of a portfolio
security has been changed, the Fund will consider all circumstances deemed
relevant in determining whether to continue to hold the security. See
"Appendix--Certain Portfolio Securities--Ratings" below and "Appendix" in
the Statement of Additional Information.
Lower Rated Securities--The Fund may invest up to 35% of its net assets in
higher yielding (and, therefore, higher risk) debt securities. These are
securities such as those rated Ba by Moody's or BB by S&P, Fitch or Duff
or as low as Caa by Moody's, or CCC by S&P, Fitch or Duff (commonly known
as junk bonds). They generally are not meant for short-term investing and
may be subject to certain risks with respect to the issuing entity and to
greater market fluctuations than certain lower yielding, higher rated
fixed-income securities. The retail secondary market for these securities
may be less liquid than that of higher rated securities; adverse
conditions could make it difficult at times for the Fund to sell certain
securities or could result in lower prices than those used in calculating
the Fund's net asset value. See "Appendix--Certain Portfolio Securities--
Ratings."
Foreign Securities--Foreign securities markets generally are not as
developed or efficient as those in the United States. Securities of some
foreign issuers are less liquid and more volatile than securities of
comparable U.S. issuers. Similarly, volume and liquidity in most foreign
securities markets are less than in the United States and, at times,
volatility of price can be greater than in the United States.
Because evidences of ownership of such securities usually
are held outside the United States, the Fund will be subject to additional
risks which include possible adverse political and economic developments,
possible seizure or nationalization of foreign deposits and possible
adoption of governmental restrictions which might adversely affect the
payment of principal and interest on the foreign securities or might
restrict the payment of principal and interest to investors located
outside the country of the issuer, whether from currency blockage or
otherwise.
Developing countries have economic structures that are
generally less diverse and mature, and political systems that are less
stable, that those of developed countries. The markets of developing
countries may be more volatile than the markets of more mature economies;
however, such markets may provide higher rates of return to investors.
Many developing countries providing investment opportunities for the Fund
have experienced substantial, and in some periods extremely high, rates of
inflation for many years. Inflation and rapid fluctuations in inflation
rates have had and may continue to have adverse effects on the economies
and securities markets of certain of these countries. In an attempt to
control inflation, wage and price controls have been imposed in certain
developing countries.
Since foreign securities often are purchased with and
payable in currencies of foreign countries, the value of these assets as
measured in U.S. dollars may be affected favorably or unfavorably by
changes in currency rates and exchange control regulations.
Foreign Currency Exchange--Currency exchange rates may fluctuate
significantly over short periods of time. They generally are determined
by the forces of supply and demand in the foreign exchange markets and the
relative merits of investments in different countries, actual or perceived
changes in interest rates and other complex factors, as seen from an
international perspective. Currency exchange rates also can be affected
unpredictably by intervention by U.S. or foreign governments or central
banks, or the failure to intervene, or by currency controls or political
developments in the United States or abroad. See "Appendix--Investment
Techniques--Foreign Currency Transactions."
Use of Derivatives--The Fund may invest in derivatives ("Derivatives").
These are financial instruments which derive their performance, at least
in part, from the performance of an underlying asset, index or interest
rate. The Derivatives the Fund may use include options and futures,
mortgage-related securities and asset-backed securities. While
Derivatives can be used effectively in furtherance of the Fund's
investment objective, under certain market conditions, they can increase
the volatility of the Fund's net asset value, can decrease the liquidity
of the Fund's investments and make more difficult the accurate pricing of
the Fund's portfolio. See "Appendix--Investment Techniques--Use of
Derivatives" below and "Investment Objective and Management Policies--
Management Policies--Derivatives" in the Statement of Additional
Information.
Simultaneous Investments--Investment decisions for the Fund are made
independently from those of the other investment companies advised by The
Dreyfus Corporation. If, however, such other investment companies desire
to invest in, or dispose of, the same securities as the Fund, available
investments or opportunities for sales will be allocated equitably to each
investment company. In some cases, this procedure may adversely affect
the size of the position obtained for or disposed of by the Fund or the
price paid or received by the Fund.
MANAGEMENT OF THE FUND
Investment Adviser--The Dreyfus Corporation, located at 200 Park Avenue,
New York, New York 10166, was formed in 1947 and serves as the Fund's
investment adviser. The Dreyfus Corporation is a wholly-owned subsidiary
of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Bank
Corporation ("Mellon"). As of September 30, 1995, The Dreyfus Corporation
managed or administered approximately $80 billion in assets for more than
$1.8 million investor accounts nationwide.
The Dreyfus Corporation supervises and assists in the
overall management of the Fund's affairs under a Management Agreement with
the Company, subject to the authority of the Company's Board in accordance
with Maryland law. The Fund's primary portfolio manager is Kevin M.
McClintock. He has held that position since inception of the Fund, and
has been employed by The Dreyfus Corporation since _________.
[Description to Come]. The Fund's other portfolio managers are identified
in the Statement of Additional Information. The Dreyfus Corporation also
provides research services for the Fund and for other funds advised by The
Dreyfus Corporation through a professional staff of portfolio managers and
securities analysts.
Mellon is a publicly owned multibank holding company
incorporated under Pennsylvania law in 1971 and registered under the
Federal Bank Holding Company Act of 1956, as amended. Mellon provides a
comprehensive range of financial products and services in domestic and
selected international markets. Mellon is among the twenty-five largest
bank holding companies in the United States based on total assets.
Mellon's principal wholly-owned subsidiaries are Mellon Bank, N.A., Mellon
Bank (DE) National Association, Mellon Bank (MD), The Boston Company,
Inc., AFCO Credit Corporation and a number of companies known as Mellon
Financial Services Corporations. Through its subsidiaries, including The
Dreyfus Corporation, Mellon managed more than $203 billion in assets as of
September 30, 1995, including approximately $80 billion in proprietary
mutual fund assets. As of September 30, 1995, Mellon, through various
subsidiaries, provided non-investment services, such as custodial or
administration services, for more than $717 billion in assets, including
approximately $55 billion in mutual fund assets.
Under the terms of the Management Agreement, the Fund has
agreed to pay The Dreyfus Corporation a monthly fee at the annual rate of
.75 of 1% of the value of the Fund's average daily net assets. From time
to time, The Dreyfus Corporation may waive receipt of its fees and/or
voluntarily assume certain expenses of the Fund, which would have the
effect of lowering the expense ratio of the Fund and increasing yield to
investors. The Fund will not pay The Dreyfus Corporation at a later time
for any amounts it may waive, nor will the Fund reimburse The Dreyfus
Corporation for any amounts it may assume.
Expenses--All expenses incurred in the operation of the Company are borne
by the Company, except to the extent specifically assumed by The Dreyfus
Corporation. The expenses borne by the Company include: organizational
costs, taxes, interest, loan commitment fees, interest and distributions
paid on securities sold short, brokerage fees and commissions, if any,
fees of Board members who are not officers, directors, employees or
holders of 5% or more of the outstanding voting securities of The Dreyfus
Corporation, Securities and Exchange Commission fees, state Blue Sky
qualification fees, advisory fees, charges of custodians, transfer and
dividend disbursing agents' fees, certain insurance premiums, industry
association fees, outside auditing and legal expenses, costs of
independent pricing services, costs of maintaining the Company's
existence, costs attributable to investor services (including, without
limitation, telephone and personnel expenses), costs of preparing and
printing prospectuses and statements of additional information for
regulatory purposes and for distribution to existing shareholders, costs
of shareholders' reports and meetings, and any extraordinary expenses.
Expenses attributable to the Fund are charged against the assets of the
Fund; other expenses of the Company are allocated among the Company's
portfolios on the basis determined by the Board, including, but not
limited to, proportionately in relation to the net assets of each
portfolio.
The Dreyfus Corporation may pay the Fund's distributor for
shareholder services from The Dreyfus Corporation's own assets, including
past profits but not including the management fee paid by the Fund. The
Fund's distributor may use part or all of such payments to pay Service
Agents (as defined below) in respect of these services.
Distributor--The Fund's distributor is Premier Mutual Fund Services, Inc.
(the "Distributor"), located at One Exchange Place, Boston, Massachusetts
02109. The Distributor's ultimate parent is Boston Institutional Group,
Inc.
Transfer and Dividend Disbursing Agent and Custodian--Dreyfus Transfer,
Inc., a wholly-owned subsidiary of The Dreyfus Corporation, One American
Express Plaza, Providence, Rhode Island 02903, is the Fund's Transfer and
Dividend Disbursing Agent (the "Transfer Agent"). The Bank of New York,
90 Washington Street, New York, New York 10286, is the Fund's Custodian.
HOW TO BUY SHARES
Fund shares are sold without a sales charge. You may be
charged a nominal fee if you effect transactions in Fund shares through a
securities dealer, bank or other financial institution (collectively,
"Service Agents"). Stock certificates are issued only upon your written
request. No certificates are issued for fractional shares. The Fund
reserves the right to reject any purchase order.
The minimum initial investment is $2,500, or $1,000 if you
are a client of a Service Agent which has made an aggregate minimum
initial purchase for its customers of $2,500. Subsequent investments must
be at least $100. However, the minimum initial investment for Dreyfus-
sponsored Keogh Plans, IRAs, SEP-IRAs and 403(b)(7) Plans with only one
participant is $750, with no minimum for subsequent purchases.
Individuals who open an IRA also may open a non-working spousal IRA with a
minimum initial investment of $250. Subsequent investments in a spousal
IRA must be at least $250. The initial investment must be accompanied by
the Account Application. For full-time or part-time employees of The
Dreyfus Corporation or any of its affiliates or subsidiaries, directors of
The Dreyfus Corporation, Board members of a fund advised by The Dreyfus
Corporation, including members of the Company's Board, or the spouse or
minor child of any of the foregoing, the minimum initial investment is
$1,000. For full-time or part-time employees of The Dreyfus Corporation
or any of its affiliates or subsidiaries who elect to have a portion of
their pay directly deposited into their Fund account, the minimum initial
investment is $50. The Fund reserves the right to offer Fund shares
without regard to minimum purchase requirements to employees participating
in certain qualified or non-qualified employee benefit plans or other
programs where contributions or account information can be transmitted in
a manner and form acceptable to the Fund. The Fund reserves the right to
vary further the initial and subsequent investment minimum requirements at
any time. Fund shares also are offered without regard to the minimum
initial investment requirements through Dreyfus-Automatic Asset Builder,
Dreyfus Government Direct Deposit Privilege or Dreyfus Payroll Savings
Plan pursuant to the Dreyfus Step Program described under "Shareholder
Services." These services enable you to make regularly scheduled
investments and may provide you with a convenient way to invest for long-
term financial goals. You should be aware, however, that periodic
investment plans do not guarantee a profit and will not protect an
investor against loss in a declining market.
You may purchase Fund shares by check or wire, or through
the Dreyfus TeleTransfer Privilege described below. Checks should be made
payable to "The Dreyfus Family of Funds," or, if for Dreyfus retirement
plan accounts, to "The Dreyfus Trust Company, Custodian" and should
specify that you are investing in the Fund. Payments to open new accounts
which are mailed should be sent to The Dreyfus Family of Funds, P.O. Box
9387, Providence, Rhode Island 02940-9387, together with your Account
Application. For subsequent investments, your Fund account number should
appear on the check and an investment slip should be enclosed and sent to
The Dreyfus Family of Funds, P.O. Box 105, Newark, New Jersey 07101-0105.
For Dreyfus retirement plan accounts, both initial and subsequent
investments should be sent to The Dreyfus Trust Company, Custodian, P.O.
Box 6427, Providence, Rhode Island 02940-6427. Neither initial nor
subsequent investments should be made by third party check. Purchase
orders may be delivered in person only to a Dreyfus Financial Center.
These orders will be forwarded to the Fund and will be processed only upon
receipt thereby. For the location of the nearest Dreyfus Financial
Center, please call one of the telephone numbers listed under "General
Information."
Wire payments may be made if your bank account is in a
commercial bank that is a member of the Federal Reserve System or any
other bank having a correspondent bank in New York City. Immediately
available funds may be transmitted by wire to The Bank of New York, DDA#
89000_____/Dreyfus Investment Grade Bond Funds, Inc./Dreyfus Intermediate
Term Income Fund, for purchase of Fund shares in your name. The wire must
include your Fund account number (for new accounts, your Taxpayer
Identification Number ("TIN") should be included instead), account
registration and dealer number, if applicable. If your initial purchase
of Fund shares is by wire, you should call 1-800-645-6561 after completing
your wire payment to obtain your Fund account number. You should include
your Fund account number on the Account Application and promptly mail the
Account Application to the Fund, as no redemptions will be permitted until
the Account Application is received. You may obtain further information
about remitting funds in this manner from your bank. All payments should
be made in U.S. dollars and, to avoid fees and delays, should be drawn
only on U.S. banks. A charge will be imposed if any check used for
investment in your account does not clear. The Fund makes available to
certain large institutions the ability to issue purchase instructions
through compatible computer facilities.
Subsequent investments also may be made by electronic
transfer of funds from an account maintained in a bank or other domestic
financial institution that is an Automated Clearing House member. You
must direct the institution to transmit immediately available funds
through the Automated Clearing House to The Bank of New York with
instructions to credit your Fund account. The instructions must specify
your Fund account registration and Fund account number preceded by the
digits "1111."
Fund shares are sold on a continuous basis at the net asset
value per share next determined after an order in proper form is received
by the Transfer Agent or other agent. Net asset value per share is
determined as of the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m., New York time), on each day the New York
Stock Exchange is open for business. For purposes of determining net
asset value, options and futures contracts will be valued 15 minutes after
the close of trading on the floor of the New York Stock Exchange. Net
asset value per share is computed by dividing the value of the Fund's net
assets (i.e., the value of its assets less liabilities) by the total
number of Fund shares outstanding. The Fund's investments are valued
generally by using available market quotations or at fair value which may
be determined by one or more pricing services approved by the Company's
Board. Each pricing services, procedures are reviewed under the general
supervision of the Board. For further information regarding the methods
employed in valuing the Fund's investments, see "Determination of Net
Asset Value" in the Statement of Additional Information.
For certain institutions that have entered into agreements
with the Distributor, payment for the purchase of Fund shares may be
transmitted, and must be received by the Transfer Agent, within three
business days after the order is placed. If such payment is not received
within three business days after the order is placed, the order may be
canceled and the institution could be held liable for resulting fees
and/or losses.
The Distributor may pay dealers a fee of up to .5% of the
amount invested through such dealers in Fund shares by employees
participating in qualified or non-qualified employee benefit plans or
other programs where (i) the employers or affiliated employers maintaining
such plans or programs have a minimum of 250 employees eligible for
participation in such plans or programs or (ii) such plan's or program's
aggregate investment in the Dreyfus Family of Funds or certain other
products made available by the Distributor to such plans or programs
exceeds one million dollars ("Eligible Benefit Plans"). All present
holdings of shares of funds in the Dreyfus Family of Funds by Eligible
Benefit Plans will be aggregated to determine the fee payable with respect
to each purchase of Fund shares. The Distributor reserves the right to
cease paying these fees at any time. The Distributor will pay such fees
from its own funds, other than amounts received from the Fund, including
past profits or any other source available to it.
Federal regulations require that you provide a certified
TIN upon opening or reopening an account. See "Dividends, Distributions
and Taxes" and the Account Application for further information concerning
this requirement. Failure to furnish a certified TIN to the Fund could
subject you to a $50 penalty imposed by the Internal Revenue Service (the
"IRS").
Dreyfus TeleTransfer Privilege--You may purchase shares (minimum $500,
maximum $150,000 per day) by telephone if you have checked the appropriate
box and supplied the necessary information on the Account Application or
have filed a Shareholder Services Form with the Transfer Agent. The
proceeds will be transferred between the bank account designated in one of
these documents and your Fund account. Only a bank account maintained in
a domestic financial institution which is an Automated Clearing House
member may be so designated. The Fund may modify or terminate this
Privilege at any time or charge a service fee upon notice to shareholders.
No such fee currently is contemplated.
If you have selected the Dreyfus TeleTransfer Privilege,
you may request a Dreyfus TeleTransfer purchase of shares by telephoning
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306.
SHAREHOLDER SERVICES
Fund Exchanges
You may purchase, in exchange for shares of the Fund,
shares of certain other funds managed or administered by The Dreyfus
Corporation, to the extent such shares are offered for sale in your state
of residence. These funds have different investment objectives which may
be of interest to you. If you desire to use this service, you should
consult your Service Agent or call 1-800-645-6561 to determine if it is
available and whether any conditions are imposed on its use.
To request an exchange, you must give exchange instructions
to the Transfer Agent in writing or by telephone. Before any exchange,
you must obtain and should review a copy of the current prospectus of the
fund into which the exchange is being made. Prospectuses may be obtained
by calling 1-800-645-6561. Except in the case of personal retirement
plans, the shares being exchanged must have a current value of at least
$500; furthermore, when establishing a new account by exchange, the shares
being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made.
The ability to issue exchange instructions by telephone is given to all
Fund shareholders automatically, unless you check the applicable "No" box
on the Account Application, indicating that you specifically refuse this
Privilege. The Telephone Exchange Privilege may be established for an
existing account by written request, signed by all shareholders on the
account, or by a separate signed Shareholder Services Form, also available
by calling 1-800-645-6561. If you have established the Telephone Exchange
Privilege, you may telephone exchange instructions by calling 1-800-221-
4060 or, if you are calling from overseas, call 1-401-455-3306. See "How
to Redeem Shares--Procedures." Upon an exchange into a new account, the
following shareholder services and privileges, as applicable and where
available, will be automatically carried over to the fund into which the
exchange is made: Telephone Exchange Privilege, Check Redemption
Privilege, Wire Redemption Privilege, Telephone Redemption Privilege,
Dreyfus TeleTransfer Privilege and the dividend/capital gain distribution
option (except for Dreyfus Dividend Sweep) selected by the investor.
Shares will be exchanged at the next determined net asset
value; however, a sales load may be charged with respect to exchanges into
funds sold with a sales load. If you are exchanging into a fund that
charges a sales load, you may qualify for share prices which do not
include the sales load or which reflect a reduced sales load, if the
shares of the fund from which you are exchanging were: (a) purchased with
a sales load, (b) acquired by a previous exchange from shares purchased
with a sales load, or (c) acquired through reinvestment of dividends or
distributions paid with respect to the foregoing categories of shares. To
qualify, at the time of the exchange you must notify the Transfer Agent or
your Service Agent must notify the Distributor. Any such qualification is
subject to confirmation of your holdings through a check of appropriate
records. See "Shareholder Services" in the Statement of Additional
Information. No fees currently are charged shareholders directly in
connection with exchanges, although the Fund reserves the right, upon not
less than 60 days' written notice, to charge shareholders a nominal fee in
accordance with rules promulgated by the Securities and Exchange
Commission. The Fund reserves the right to reject any exchange request in
whole or in part. The availability of Fund Exchanges may be modified or
terminated at any time upon notice to shareholders. See "Dividends,
Distributions and Taxes."
Dreyfus Auto-Exchange Privilege
Dreyfus Auto-Exchange Privilege enables you to invest
regularly (on a semi-monthly, monthly, quarterly or annual basis), in
exchange for shares of the Fund, in shares of certain other funds in the
Dreyfus Family of Funds of which you are currently an investor. The
amount you designate, which can be expressed either in terms of a specific
dollar or share amount ($100 minimum), will be exchanged automatically on
the first and/or fifteenth day of the month according to the schedule you
have selected. Shares will be exchanged at the then-current net asset
value; however, a sales load may be charged with respect to exchanges into
funds sold with a sales load. See "Shareholder Services" in the Statement
of Additional Information. The right to exercise this Privilege may be
modified or canceled by the Fund or the Transfer Agent. You may modify or
cancel your exercise of this Privilege at any time by mailing written
notification to The Dreyfus Family of Funds, P.O. Box 9671, Providence,
Rhode Island 02940-9671. The Fund may charge a service fee for the use of
this Privilege. No such fee currently is contemplated. See "Dividends,
Distributions and Taxes." For more information concerning this Privilege
and the funds in the Dreyfus Family of Funds eligible to participate in
this Privilege, or to obtain a Dreyfus Auto-Exchange Authorization Form,
please call toll free 1-800-645-6561.
Dreyfus-Automatic Asset BuilderRegistrationMark
Dreyfus-Automatic Asset Builder permits you to purchase
Fund shares (minimum of $100 and maximum of $150,000 per transaction) at
regular intervals selected by you. Fund shares are purchased by
transferring funds from the bank account designated by you. At your
option, the account designated by you will be debited in the specified
amount, and Fund shares will be purchased, once a month, on either the
first or fifteenth day, or twice a month, on both days. Only an account
maintained at a domestic financial institution which is an Automated
Clearing House member may be so designated. To establish a Dreyfus-
Automatic Asset Builder account, you must file an authorization form with
the Transfer Agent. You may obtain the necessary authorization form by
calling 1-800-645-6561. You may cancel your participation in this
Privilege or change the amount of purchase at any time by mailing written
notification to The Dreyfus Family of Funds, P.O. Box 9671, Providence,
Rhode Island 02940-9671, or, if for Dreyfus retirement plan accounts, to
The Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence, Rhode
Island 02940-6427, and the notification will be effective three business
days following receipt. The Fund may modify or terminate this Privilege
at any time or charge a service fee. No such fee currently is
contemplated.
Dreyfus Government Direct Deposit Privilege
Dreyfus Government Direct Deposit Privilege enables you to
purchase Fund shares (minimum of $100 and maximum of $50,000 per
transaction) by having Federal salary, Social Security, or certain
veterans', military or other payments from the Federal government
automatically deposited into your Fund account. You may deposit as much
of such payments as you elect. To enroll in Dreyfus Government Direct
Deposit, you must file with the Transfer Agent a completed Direct Deposit
Sign-Up Form for each type of payment that you desire to include in this
Privilege. The appropriate form may be obtained by calling
1-800-645-6561. Death or legal incapacity will terminate your participa-
tion in this Privilege. You may elect at any time to terminate your
participation by notifying in writing the appropriate Federal agency. The
Fund may terminate your participation upon 30 days' notice to you.
Dreyfus Payroll Savings Plan
Dreyfus Payroll Savings Plan permits you to purchase Fund
shares (minimum of $100 per transaction) automatically on a regular basis.
Depending upon your employer's direct deposit program, you may have part
or all of your paycheck transferred to your existing Dreyfus account
electronically through the Automated Clearing House system at each pay
period. To establish a Dreyfus Payroll Savings Plan account, you must
file an authorization form with your employer's payroll department. Your
employer must complete the reverse side of the form and return it to The
Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode Island 02940-
9671. You may obtain the necessary authorization form by calling 1-800-
645-6561. You may change the amount of purchase or cancel the
authorization only by written notification to your employer. It is the
sole responsibility of your employer, not the Distributor, The Dreyfus
Corporation, the Fund, the Transfer Agent or any other person, to arrange
for transactions under the Dreyfus Payroll Savings Plan. The Fund may
modify or terminate this Privilege at any time or charge a service fee.
No such fee currently is contemplated.
Dreyfus Step Program
Dreyfus Step Program enables you to purchase Fund shares
without regard to the Fund's minimum initial investment requirements
through Dreyfus-Automatic Asset Builder, Dreyfus Government Direct Deposit
Privilege or Dreyfus Payroll Savings Plan. To establish a Dreyfus Step
Program account, you must supply the necessary information on the Account
Application and file the required authorization form(s) with the Transfer
Agent. For more information concerning this Program, or to request the
necessary authorization form(s), please call toll free 1-800-782-6620.
You may terminate your participation in this Program at any time by
discontinuing your participation in Dreyfus-Automatic Asset Builder,
Dreyfus Government Direct Deposit Privilege or Dreyfus Payroll Savings
Plan, as the case may be, as provided under the terms of such
Privilege(s). The Fund may modify or terminate this Program at any time.
Investors who wish to purchase Fund shares through the Dreyfus Step
Program in conjunction with a Dreyfus-sponsored retirement plan may do so
only for IRAs, SEP-IRAs and IRA "Rollover Accounts."
Dreyfus Dividend Options
Dreyfus Dividend Sweep enables you to invest automatically
dividends or dividends and capital gain distributions, if any, paid by
the Fund in shares of another fund in the Dreyfus Family of Funds of which
you are a shareholder. Shares of the other fund will be purchased at the
then-current net asset value; however, a sales load may be charged with
respect to investments in shares of a fund sold with a sales load. If you
are investing in a fund that charges a sales load, you may qualify for
share prices which do not include the sales load or which reflect a
reduced sales load. If you are investing in a fund that charges a
contingent deferred sales charge, the shares purchased will be subject on
redemption to the contingent deferred sales charge, if any, applicable to
the purchased shares. See "Shareholder Services" in the Statement of
Additional Information. Dreyfus Dividend ACH permits you to transfer
electronically dividends or dividends and capital gain distributions, if
any, from the Fund to a designated bank account. Only an account
maintained at a domestic financial institution which is an Automated
Clearing House member may be so designated. Banks may charge a fee for
this service.
For more information concerning these privileges or to
request a Dividend Options Form, please call toll free 1-800-645-6561.
You may cancel these privileges by mailing written notification to The
Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode Island 02940-
9671. To select a new fund after cancellation, you must submit a new
Dividend Options Form. Enrollment in or cancellation of these privileges
is effective three business days following receipt. These privileges are
available only for existing accounts and may not be used to open new
accounts. Minimum subsequent investments do not apply for Dreyfus
Dividend Sweep. The Fund may modify or terminate these privileges at any
time or charge a service fee. No such fee currently is contemplated.
Shares held under Keogh Plans, IRAs or other retirement plans are not
eligible for Dreyfus Dividend Sweep.
Automatic Withdrawal Plan
The Automatic Withdrawal Plan permits you to request
withdrawal of a specified dollar amount (minimum of $50) on either a
monthly or quarterly basis if you have a $5,000 minimum account. An
application for the Automatic Withdrawal Plan can be obtained by calling
1-800-645-6561. There is a service charge of $.50 for each withdrawal
check. The Automatic Withdrawal Plan may be ended at any time by you, the
Fund or the Transfer Agent. Shares for which certificates have been
issued may not be redeemed through the Automatic Withdrawal Plan.
Retirement Plans
The Fund offers a variety of pension and profit-sharing
plans, including Keogh Plans, IRAs, SEP-IRAs and IRA "Rollover Accounts,"
401(k) Salary Reduction Plans and 403(b)(7) Plans. Plan support services
also are available. You can obtain details on the various plans by
calling the following numbers toll free: for Keogh Plans, please call 1-
800-358-5566; for IRAs and IRA "Rollover Accounts," please call 1-800-645-
6561; for SEP-IRAs, 401(k) Salary Reduction Plans and 403(b)(7) Plans,
please call 1-800-322-7880.
HOW TO REDEEM SHARES
General
You may request redemption of your shares at any time.
Redemption requests should be transmitted to the Transfer Agent as
described below. When a request is received in proper form, the Fund will
redeem the shares at the next determined net asset value.
The Fund imposes no charges when shares are redeemed.
Service Agents may charge their clients a nominal fee for effecting
redemptions of Fund shares. Any certificates representing Fund shares
being redeemed must be submitted with the redemption request. The value
of the shares redeemed may be more or less than their original cost,
depending upon the Fund's then-current net asset value.
The Fund ordinarily will make payment for all shares
redeemed within seven days after receipt by the Transfer Agent of a
redemption request in proper form, except as provided by the rules of the
Securities and Exchange Commission. However, if you have purchased Fund
shares by check, by Dreyfus TeleTransfer Privilege or through Dreyfus-
Automatic Asset Builder and subsequently submit a written redemption
request to the Transfer Agent, the redemption proceeds will be transmitted
to you promptly upon bank clearance of your purchase check, Dreyfus
TeleTransfer purchase or Dreyfus-Automatic Asset Builder order, which may
take up to eight business days or more. In addition, the Fund will not
honor Redemption Checks under the Check Redemption Privilege, and will
reject requests to redeem shares by wire or telephone or pursuant to the
Dreyfus TeleTransfer Privilege, for a period of eight business days after
receipt by the Transfer Agent of the purchase check, the Dreyfus
TeleTransfer purchase or the Dreyfus-Automatic Asset Builder order against
which such redemption is requested. These procedures will not apply if
your shares were purchased by wire payment, or if you otherwise have a
sufficient collected balance in your account to cover the redemption
request. Prior to the time any redemption is effective, dividends on such
shares will accrue and be payable, and you will be entitled to exercise
all other rights of beneficial ownership. Fund shares will not be
redeemed until the Transfer Agent has received your Account Application.
The Fund reserves the right to redeem your account at its
option upon not less than 45 days' written notice if your account's net
asset value is $500 or less and remains so during the notice period.
Procedures
You may redeem shares by using the regular redemption
procedure through the Transfer Agent, or, if you have checked the
appropriate box and supplied the necessary information on the Account
Application or have filed a Shareholder Services Form with the Transfer
Agent, through the Check Redemption Privilege, the Wire Redemption
Privilege, the Telephone Redemption Privilege or the Dreyfus TeleTransfer
Privilege. Other redemption procedures may be in effect for clients of
certain Service Agents. The Fund makes available to certain large
institutions the ability to issue redemption instructions through
compatible computer facilities. The Fund reserves the right to refuse any
request made by wire or telephone, including requests made shortly after a
change of address, and may limit the amount involved or the number of such
requests. The Fund may modify or terminate any redemption Privilege at
any time or charge a service fee upon notice to shareholders. No such fee
currently is contemplated.
You may redeem shares by telephone if you have checked the
appropriate box on the Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select a telephone
redemption privilege or telephone exchange privilege (which is granted
automatically unless you refuse it), you authorize the Transfer Agent to
act on telephone instructions from any person representing himself or
herself to be you, and reasonably believed by the Transfer Agent to be
genuine. The Fund will require the Transfer Agent to employ reasonable
procedures, such as requiring a form of personal identification, to
confirm that instructions are genuine and, if it does not follow such
procedures, the Fund or the Transfer Agent may be liable for any losses
due to unauthorized or fraudulent instructions. Neither the Fund nor the
Transfer Agent will be liable for following telephone instructions
reasonably believed to be genuine.
During times of drastic economic or market conditions, you
may experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or exchange of Fund shares. In such cases, you
should consider using the other redemption procedures described herein.
Use of these other redemption procedures may result in your redemption
request being processed at a later time than it would have been if
telephone redemption had been used. During the delay, the Fund's net
asset value may fluctuate.
Regular Redemption--Under the regular redemption procedure, you may redeem
shares by written request mailed to The Dreyfus Family of Funds, P.O. Box
9671, Providence, Rhode Island 02940-9671. Redemption requests may be
delivered in person only to a Dreyfus Financial Center. These requests
will be forwarded to the Fund and will be processed only upon receipt
thereby. For the location of the nearest Dreyfus Financial Center, please
call one of the telephone numbers listed under "General Information."
Redemption requests must be signed by each shareholder, including each
owner of a joint account, and each signature must be guaranteed. The
Transfer Agent has adopted standards and procedures pursuant to which
signature-guarantees in proper form generally will be accepted from
domestic banks, brokers, dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and
savings associations, as well as from participants in the New York Stock
Exchange Medallion Signature Program, the Securities Transfer Agents
Medallion Program ("STAMP") and the Stock Exchanges Medallion Program. If
you have any questions with respect to signature-guarantees, please call
one of the telephone numbers listed under "General Information."
Redemption proceeds of at least $1,000 will be wired to any
member bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
Check Redemption Privilege--You may write Redemption Checks drawn on your
Fund account. Redemption Checks may be made payable to the order of any
person in the amount of $500 or more. Potential fluctuations in the net
asset value of the Fund's shares should be considered in determining the
amount of the check. Redemption Checks should not be used to close your
account. Redemption Checks are free, but the Transfer Agent will impose a
fee for stopping payment of a Redemption Check upon your request or if the
Transfer Agent cannot honor a Redemption Check due to insufficient funds
or other valid reason. You should date your Redemption Checks with the
current date when you write them. Please do not postdate your Redemption
Checks. If you do, the Transfer Agent will honor upon presentment, even
if presented before the date of the check, all postdated Redemption Checks
which are dated within six months of presentment for payment, if they are
otherwise in good order. Shares for which certificates have been issued
may not be redeemed by Redemption Check. Shares held under Keogh Plans,
IRAs or other Dreyfus retirement plans are not eligible for this
Privilege. This Privilege will be terminated immediately, without notice,
with respect to any account which is, or becomes, subject to backup
withholding on redemptions (see "Dividends, Distributions and Taxes").
Any Redemption Check written on an account which has become subject to
backup withholding on redemptions will not be honored by the Transfer
Agent.
Wire Redemption Privilege--You may request by wire or telephone that
redemption proceeds (minimum $1,000) be wired to your account at a bank
which is a member of the Federal Reserve System, or a correspondent bank
if your bank is not a member. You also may direct that redemption
proceeds be paid by check (maximum $150,000 per day) made out to the
owners of record and mailed to your address. Redemption proceeds of less
than $1,000 will be paid automatically by check. Holders of jointly
registered Fund or bank accounts may have redemption proceeds of not more
than $250,000 wired within any 30-day period. You may telephone
redemption requests by calling 1-800-221-4060 or, if you are calling from
overseas, call 1-401-455-3306. The Statement of Additional Information
sets forth instructions for transmitting redemption requests by wire.
Shares held under Keogh Plans, IRAs or other retirement plans, and shares
for which certificates have been issued, are not eligible for this
Privilege.
Telephone Redemption Privilege--You may request by telephone that
redemption proceeds (maximum $150,000 per day) be paid by check and mailed
to your address. You may telephone redemption instructions by calling 1-
800-221-4060 or, if you are calling from overseas, call 1-401-455-3306.
Shares held under Keogh Plans, IRAs or other retirement plans, and shares
for which certificates have been issued, are not eligible for this
Privilege.
Dreyfus TeleTransfer Privilege--You may request by telephone that
redemption proceeds (minimum $500 per day) be transferred between your
Fund account and your bank account. Only a bank account maintained in a
domestic financial institution which is an Automated Clearing House member
may be designated. Redemption proceeds will be on deposit in your account
at an Automated Clearing House member bank ordinarily two days after
receipt of the redemption request or, at your request, paid by check
(maximum $150,000 per day) and mailed to your address. Holders of jointly
registered Fund or bank accounts may redeem through the Dreyfus
TeleTransfer Privilege for transfer to their bank account not more than
$250,000 within any 30-day period.
If you have selected the Dreyfus TeleTransfer Privilege,
you may request a Dreyfus TeleTransfer redemption of shares by telephoning
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306.
Shares held under Keogh Plans, IRAs or other retirement plans, and shares
issued in certificate form, are not eligible for this Privilege.
SHAREHOLDER SERVICES PLAN
The Fund has adopted a Shareholder Services Plan, pursuant
to which it pays the Distributor for the provision of certain services to
Fund shareholders a fee at the annual rate of .25 of 1% of the value of
the Fund's average daily net assets. The services provided may include
personal services relating to shareholder accounts, such as answering
shareholder inquiries regarding the Fund and providing reports and other
information, and services related to the maintenance of shareholder
accounts. The Distributor may make payments to Service Agents in respect
of these services. The Distributor determines the amounts to be paid to
Service Agents.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Under the Internal Revenue Code of 1986, as amended (the
"Code"), the Fund is treated as a separate corporation for purposes of
qualification and taxation as a regulated investment company. The Fund
ordinarily declares dividends from its net investment income on each day
the New York Stock Exchange is open for business. Dividends usually are
paid on the last business day of each month. The Fund's earnings for
Saturdays, Sundays and holidays are declared as dividends on the next
business day. If you redeem all shares in your account at any time during
the month, all dividends to which you are entitled will be paid to you
along with the proceeds of the redemption. If you are an omnibus
accountholder and indicate in a partial redemption request that a portion
of any accrued dividends to which such account is entitled belongs to an
underlying accountholder who has redeemed all shares in his or her
account, such portion of the accrued dividends will be paid to you along
with the proceeds of the redemption. Distributions from net realized
securities gains, if any, generally are declared and paid once a year, but
the Fund may make distributions on a more frequent basis to comply with
the distribution requirements of the Code, in all events in a manner
consistent with the provisions of the 1940 Act. The Fund will not make
distributions from net realized securities gains unless capital loss
carryovers, if any, have been utilized or have expired. You may choose
whether to receive dividends and distributions in cash or to reinvest in
additional shares at net asset value. All expenses are accrued daily and
deducted before declaration of dividends to investors.
Dividends derived from net investment income, together with
distributions from net realized short-term securities gains and all or a
portion of any gains realized from the sale or other disposition of
certain market discount bonds, paid by the Fund will be taxable to U.S.
shareholders as ordinary income whether received in cash or reinvested in
additional shares. No dividend paid by the Fund will qualify for the
dividends received deduction allowable to certain U.S. corporations.
Distributions from net realized long-term securities gains of the Fund
will be taxable to U.S. shareholders as long-term capital gains for
Federal income tax purposes, regardless of how long shareholders have held
their Fund shares and whether such distributions are received in cash or
reinvested in Fund shares. The Code provides that the net capital gain of
an individual generally will not be subject to Federal income tax at a
rate in excess of 28%. Dividends and distributions may be subject to
state and local taxes.
Dividends derived from net investment income, together with
distributions from net realized short-term securities gains and all or a
portion of any gains realized from the sale or other disposition of
certain market discount bonds, paid by the Fund to a foreign investor
generally are subject to U.S. nonresident withholding taxes at the rate of
30%, unless the foreign investor claims the benefit of a lower rate
specified in a tax treaty. Distributions from net realized long-term
securities gains paid by the Fund to a foreign investor as well as the
proceeds of any redemptions from a foreign investor's account, regardless
of the extent to which gain or loss may be realized, generally will not be
subject to U.S. nonresident withholding tax. However, such distributions
may be subject to backup withholding, as described below, unless the
foreign investor certifies his non-U.S. residency status.
The exchange of shares of one fund for shares of another is
treated for Federal income tax purposes as a sale of the shares given in
exchange by the shareholder and, therefore, an exchanging shareholder may
realize a taxable gain or loss.
Notice as to the tax status of your dividends and
distributions will be mailed to you annually. You also will receive
periodic summaries of your account which will include information as to
dividends and distributions from securities gains, if any, paid during the
year.
Federal regulations generally require the Fund to withhold
("backup withholding") and remit to the U.S. Treasury 31% of dividends,
distributions from net realized securities gains and the proceeds of any
redemption, regardless of the extent to which gain or loss may be
realized, paid to a shareholder if such shareholder fails to certify
either that the TIN furnished in connection with opening an account is
correct or that such shareholder has not received notice from the IRS of
being subject to backup withholding as a result of a failure to properly
report taxable dividend or interest income on a Federal income tax return.
Furthermore, the IRS may notify the Fund to institute backup withholding
if the IRS determines a shareholder's TIN is incorrect or if a shareholder
has failed to properly report taxable dividend and interest income on a
Federal income tax return.
A TIN is either the Social Security number or employer
identification number of the record owner of the account. Any tax
withheld as a result of backup withholding does not constitute an
additional tax imposed on the record owner of the account, and may be
claimed as a credit on the record owner's Federal income tax return.
It is expected that the Fund will qualify as a "regulated
investment company" under the Code so long as such qualification is in the
best interests of its shareholders. Such qualification relieves the Fund
of any liability for Federal income tax to the extent its earnings are
distributed in accordance with applicable provisions of the Code. The
Fund is subject to a non-deductible 4% excise tax, measured with respect
to certain undistributed amounts of taxable investment income and capital
gains.
You should consult your tax adviser regarding specific
questions as to Federal, state or local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance may be calculated
on several bases, including current yield, average annual total return
and/or total return.
Current yield refers to the Fund's annualized net
investment income per share over a 30-day period, expressed as a
percentage of the net asset value per share at the end of the period. For
purposes of calculating current yield, the amount of net investment income
per share during that 30-day period, computed in accordance with
regulatory requirements, is compounded by assuming that it is reinvested
at a constant rate over a six-month period. An identical result is then
assumed to have occurred during a second six-month period which, when
added to the result for the first six months, provides an "annualized"
yield for an entire one-year period. Calculations of current yield may
reflect absorbed expenses pursuant to any undertaking that may be in
effect. See "Management of the Fund."
Average annual total return is calculated pursuant to a
standardized formula which assumes that an investment was purchased with
an initial payment of $1,000 and that the investment was redeemed at the
end of a stated period of time, after giving effect to the reinvestment of
dividends and distributions during the period. The return is expressed as
a percentage rate which, if applied on a compounded annual basis, would
result in the redeemable value of the investment at the end of the period.
Advertisements of the Fund's performance will include the Fund's average
annual total return for one, five and ten year periods, or for shorter
periods depending upon the length of time during which the Fund has
operated.
Total return is computed on a per share basis and assumes
the reinvestment of dividends and distributions. Total return generally
is expressed as a percentage rate which is calculated by combining the
income and principal changes for a specified period and dividing by the
net asset value per share at the beginning of the period. Advertisements
may include the percentage rate of total return or may include the value
of a hypothetical investment at the end of the period which assumes the
application of the percentage rate of total return.
Performance will vary from time to time and past results
are not necessarily representative of future results. You should remember
that performance is a function of portfolio management in selecting the
type and quality of portfolio securities and is affected by operating
expenses. Performance information, such as that described above, may not
provide a basis for comparison with other investments or other investment
companies using a different method of calculating performance.
Comparative performance information may be used from time
to time in advertising or marketing the Fund's shares, including data from
Lipper Analytical Services, Inc., the Lehman Brothers Aggregate Bond
Index, Moody's Bond Survey Bond Index, Bond Buyer's 20-Bond Index,
Morningstar, Inc. and other industry publications.
GENERAL INFORMATION
The Company was incorporated under Maryland law on June 26,
1992, and commenced operations on August 18, 1992. Before
November 8, 1995, the Company's name was Dreyfus Short-Term Income Fund,
Inc. The Company is authorized to issue one billion shares of Common
Stock (with 500 million shares allocated to the Fund), par value $.001 per
share. Each share has one vote.
Unless otherwise required by the 1940 Act, ordinarily it
will not be necessary for the Fund to hold annual meetings of
shareholders. As a result, Fund shareholders may not consider each year
the election of Board members or the appointment of auditors. However,
pursuant to the Company's By-Laws, the holders of at least 10% of the
shares outstanding and entitled to vote may require the Company to hold a
special meeting of shareholders for purposes of removing a Board member
from office or for any other purpose. Shareholders may remove a Board
member by the affirmative vote of a majority of the Company's outstanding
voting shares. In addition, the Board will call a meeting of shareholders
for the purpose of electing Board members if, at any time, less than a
majority of the Board members then holding office have been elected by
shareholders.
The Company is a "series fund," which is a mutual fund
divided into separate portfolios, each of which is treated as a separate
entity for certain matters under the 1940 Act and for other purposes. A
shareholder of one portfolio is not deemed to be a shareholder of any
other portfolio. For certain matters shareholders vote together as a
group; as to others they vote separately by portfolio. By this
Prospectus, shares of the Fund are being offered. Other portfolios are
sold pursuant to other offering documents.
To date, the Board has authorized the creation of two
series of shares. All consideration received by the Company for shares of
one of the series and all assets in which such consideration is invested
will belong to that series (subject only to the rights of creditors of the
Company) and will be subject to the liabilities related thereto. The
income attributable to, and the expenses of, one series are treated
separately from those of the other series. The Company has the ability to
create, from time to time, new series without shareholder approval.
The Transfer Agent maintains a record of your ownership and
sends you confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at
144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144, or by calling
toll free 1-800-645-6561. In New York City, call 1-718-895-1206; outside
the U.S. and Canada, call 516-794-5452.
APPENDIX
Investment Techniques
Foreign Currency Transactions--Foreign currency transactions may be
entered into for a variety of purposes, including: to fix in U.S.
dollars, between trade and settlement date, the value of a security the
Fund has agreed to buy or sell; or to hedge the U.S. dollar value of
securities the Fund already owns, particularly if it expects a decrease in
the value of the currency in which the foreign security is denominated; or
to gain exposure to the foreign currency in an attempt to realize gains.
Foreign currency transactions may involve, for example, the
Fund's purchase of foreign currencies for U.S. dollars or the maintenance
of short positions in foreign currencies, which would involve the Fund
agreeing to exchange an amount of a currency it did not currently own for
another currency at a future date in anticipation of a decline in the
value of the currency sold relative to the currency the Fund contracted to
receive in the exchange. The Fund's success in these transactions will
depend principally on The Dreyfus Corporation's ability to predict
accurately the future exchange rates between foreign currencies and the
U.S. dollar.
Leverage--Leveraging will exaggerate the effect on net asset value of any
increase or decrease in the market value of the Fund's portfolio. Money
borrowed for leveraging will be limited to 33-1/3% of the value of the
Fund's total assets. These borrowings will be subject to interest costs
which may or may not be recovered by appreciation of the securities
purchased; in certain cases, interest costs may exceed the return received
on the securities purchased.
The Fund may enter into reverse repurchase agreements with
banks, brokers or dealers. This form of borrowing involves the transfer
by the Fund of an underlying debt instrument in return for cash proceeds
based on a percentage of the value of the security. The Fund retains the
right to receive interest and principal payments on the security. At an
agreed upon future date, the Fund repurchases the security at principal
plus accrued interest. Except for these transactions, the Fund's
borrowings generally will be unsecured.
Short-Selling--In these transactions, the Fund sells a security it does
not own in anticipation of a decline in the market value of the security.
To complete the transaction, the Fund must borrow the security to make
delivery to the buyer. The Fund is obligated to replace the security
borrowed by purchasing it subsequently at the market price at the time of
replacement. The price at such time may be more or less than the price at
which the security was sold by the Fund. The Fund will incur a loss if
the price of the security increases between the date of the short sale and
the date on which the Fund replaces the borrowed security; it will realize
a gain if the security declines in price between those dates.
Securities will not be sold short if, after effect is given
to any such short sale, the total market value of all securities sold
short would exceed 25% of the value of the Fund's net assets. The Fund
may not sell short the securities of any single issuer listed on a
national securities exchange to the extent of more than 5% of the value of
the Fund's net assets. The Fund may not sell short the securities of any
class of an issuer if, as a result of such sale, the Fund would have sold
short in the aggregate more than 5% of the outstanding securities of that
class.
The Fund also may make short sales "against the box," in
which the Fund enters into a short sale of a security it owns in order to
hedge an unrealized gain on the security. At no time will more than 15%
of the value of the Fund's net assets be in deposits on short sales
against the box.
Use of Derivatives--Although the Fund will not be a commodity pool,
Derivatives subject the Fund to the rules of the Commodity Futures Trading
Commission which limit the extent to which the Fund can invest in certain
Derivatives. The Fund may invest in futures contracts and options with
respect thereto for hedging purposes without limit. However, the Fund may
not invest in such contracts and options for other purposes if the sum of
the amount of initial margin deposits and premiums paid for unexpired
options with respect to such contracts, other than for bona fide hedging
purposes, exceed 5% of the liquidation value of the Fund's assets, after
taking into account unrealized profits and unrealized losses on such
contracts and options; provided, however, that in the case of an option
that is in-the-money at the time of purchase, the in-the-money amount may
be excluded in calculating the 5% limitation.
The Fund may invest up to 5% of its assets, represented by
the premium paid, in the purchase of call and put options. The Fund may
write (i.e., sell) covered call and put option contracts to the extent of
20% of the value of its net assets at the time such option contracts are
written. When required by the Securities and Exchange Commission, the
Fund will set aside permissible liquid assets in a segregated account to
cover its obligations relating to its purchase of Derivatives. To
maintain this required cover, the Fund may have to sell portfolio
securities at disadvantageous prices or times since it may not be possible
to liquidate a Derivative position at a reasonable price.
Derivatives can be volatile and involve various types and
degrees of risk, depending upon the characteristics of the particular
Derivative and the portfolio as a whole. Derivatives permit the Fund to
increase, decrease or change the level of risk to which its portfolio is
exposed in much the same way as the Fund can increase, decrease or change
the risk of its portfolio by making investments in specific securities.
In addition, Derivatives may entail investment exposures
that are greater than their cost would suggest, meaning that a small
investment in Derivatives could have a large potential impact on the
Fund's performance.
If the Fund invests in Derivatives at inappropriate times
or judges market conditions incorrectly, such investments may lower the
Fund's return or result in a loss. The Fund also could experience losses
if it were unable to liquidate its position because of an illiquid
secondary market. The market for many Derivatives is, or suddenly can
become, illiquid. Changes in liquidity may result in significant, rapid
and unpredictable changes in the prices for Derivatives.
Lending Portfolio Securities--The Fund may lend securities from its
portfolio to brokers, dealers and other financial institutions needing to
borrow securities to complete certain transactions. In connection with
such loans, the Fund continues to be entitled to payments in amounts equal
to the interest or other distributions payable on the loaned securities.
Loans of portfolio securities afford the Fund an opportunity to earn
interest on the amount of the loan and at the same time to earn income on
the loaned securities' collateral. Loans of portfolio securities may not
exceed 33-1/3% of the value of the Fund's total assets. In connection
with such loans, the Fund will receive collateral consisting of cash, U.S.
Government securities or irrevocable letters of credit which will be
maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities. Such loans are terminable by the
Fund at any time upon specified notice. The Fund might experience risk of
loss if the institution with which it has engaged in a portfolio loan
transaction breaches its agreement with the Fund.
Forward Commitments--The Fund may purchase securities on a forward
commitment or when-issued basis, which means that delivery and payment
take place a number of days after the date of the commitment to purchase.
The payment obligation and the interest rate that will be received on a
forward commitment or when-issued security are fixed at the time the Fund
enters into the commitment. However, the Fund does not make a payment
until it receives delivery from the other party to the transaction. The
Fund will make commitments to purchase such securities only with the
intention of actually acquiring the securities, but the Fund may sell
these securities before the settlement date if it is deemed advisable. A
segregated account of the Fund consisting of cash, cash equivalents or
U.S. Government securities or other high quality liquid debt securities at
least equal at all times to the amount of the commitments will be
established and maintained at the Fund's custodian bank.
Forward Roll Transactions--In order to enhance current income, the Fund
may enter into forward roll transactions with respect to mortgage-related
securities. In a forward roll transaction, the Fund sells a mortgage
security to a financial institution, such as a bank or broker-dealer, and
simultaneously agrees to repurchase a similar security from the
institution at a later date at an agreed upon price. The mortgage
securities that are repurchased will bear the same interest rate as those
sold, but generally will be collaterized by different pools of mortgages
with different pre-payment histories than those sold. During the period
between the sale and repurchase, the Fund will not be entitled to receive
interest and principal payments on the securities sold. Proceeds of the
sale will be invested in short-term instruments, particularly repurchase
agreements, and the income from these investments, together with any
additional fee income received on the sale will generate income for the
Fund exceeding the yield on the securities sold. Forward roll
transactions involve the risk that the market value of the securities sold
by the Fund may decline below the repurchase price of those securities. A
segregated account of the Fund consisting of cash, U.S. Government
securities or other high quality liquid debt securities at least equal to
the amount of the repurchase price (including accrued interest) will be
established and maintained at the Fund's custodian bank.
Certain Portfolio Securities
Mortgage-Related Securities--Mortgage-related securities are a form of
Derivative collateralized by pools of mortgages assembled for sale to
investors by various governmental agencies, such as the Government
National Mortgage Association and government-related organizations such as
the Federal National Mortgage Association and the Federal Home Loan
Mortgage Corporation, as well as by private issuers such as commercial
banks, savings and loan institutions, mortgage banks and private mortgage
insurance companies, and similar foreign entities. The mortgage-related
securities which may be purchased include those with fixed, floating and
variable interest rates, those with interest rates that change based on
multiples of changes in interest rates and those with interest rates that
change inversely to changes in interest rates, as well as stripped
mortgage-backed securities. Stripped mortgage-backed securities usually
are structured with two classes that receive different proportions of
interest and principal distributions on a pool of mortgage-backed
securities or whole loans. A common type of stripped mortgage-backed
security will have one class receiving some of the interest and most of
the principal from the mortgage collateral, while the other class will
receive most of the interest and the remainder of the principal. Although
certain mortgage-related securities are guaranteed by a third party or
otherwise similarly secured, the market value of the security, which may
fluctuate, is not secured. If a mortgage-related security is purchased at
a premium, all or part of the premium may be lost if there is a decline in
the market value of the security, whether resulting from changes in
interest rates or prepayments on the underlying mortgage collateral. As
with other interest-bearing securities, the prices of certain of these
securities are inversely affected by changes in interest rates. However,
although the value of a mortgage-related security may decline when
interest rates rise, the converse is not necessarily true, since in
periods of declining interest rates the mortgages underlying the security
are more likely to be prepaid. For this and other reasons, a mortgage-
related security's stated maturity may be shortened by unscheduled
prepayments on the underlying mortgages, and, therefore, it is not
possible to predict accurately the security's return to the Fund.
Moreover, with respect to stripped mortgage-backed securities, if the
underlying mortgage securities experience greater than anticipated
prepayments of principal, the Fund may fail to fully recoup its initial
investment even if the securities are rated in the highest rating category
by a nationally recognized statistical rating organization. For further
discussion concerning the investment considerations involved, see
"Description of the Fund--Investment Considerations and Risks--Fixed-
Income Securities" and "Illiquid Securities" below.
Asset-Backed Securities--Asset-backed securities are a form of Derivative.
The securitization techniques used for asset-backed securities are similar
to those used for mortgage-related securities. The collateral for these
securities has included home equity loans, automobile and credit card
receivables, boat loans, computer leases, airplane leases, mobile home
loans, recreational vehicle loans and hospital account receivables. The
Fund may invest in these and other types of asset-backed securities that
may be developed in the future.
Asset-backed securities present certain risks that are not
presented by mortgage-backed securities. Primarily, these securities may
provide the Fund with a less effective security interest in the related
collateral than do mortgage-backed securities. Therefore, there is the
possibility that recoveries on the underlying collateral may not, in some
cases, be available to support payments on these securities.
Convertible Securities--Convertible securities are fixed-income securities
that may be converted at either a stated price or stated rate into
underlying shares of common stock. Convertible securities have
characteristics similar to both fixed-income and equity securities.
Convertible securities generally are subordinated to other similar but
non-convertible securities of the same issuer, although convertible bonds,
as corporate debt obligations, enjoy seniority in right of payment to all
equity securities, and convertible preferred stock is senior to common
stock, of the same issuer. Because of the subordination feature, however,
convertible securities typically have lower ratings than similar non-
convertible securities.
Municipal Obligations--Municipal obligations are debt obligations issued
by states, territories and possessions of the United States and the
District of Columbia and their political subdivisions, agencies and
instrumentalities, or multistate agencies or authorities. Municipal
obligations bear fixed, floating or variable rates of interest. Certain
municipal obligations are subject to redemption at a date earlier than
their stated maturity pursuant to call options, which may be separated
from the related municipal obligations and purchased and sold separately.
The Fund also may acquire call options on specific municipal obligations.
The Fund generally would purchase these call options to protect the Fund
from the issuer of the related municipal obligation redeeming, or other
holder of the call option from calling away, the municipal obligation
before maturity.
While, in general, municipal obligations are tax exempt
securities having relatively low yields as compared to taxable, non-
municipal obligations of similar quality, certain municipal obligations
are taxable obligations, offering yields comparable to, and in some cases
greater than, the yields available on other permissible Fund investments.
Dividends received by shareholders on Fund shares which are attributable
to interest income received by the Fund from municipal obligations
generally will be subject to Federal income tax. The Fund will invest in
municipal obligations, the ratings of which correspond with the ratings of
other permissible Fund investments. The Fund currently intends to invest
no more than 25% of its assets in municipal obligations. However, this
percentage may be varied from time to time without shareholder approval.
Zero Coupon Securities--The Fund may invest in zero coupon U.S. Treasury
securities, which are Treasury Notes and Bonds that have been stripped of
their unmatured interest coupons, the coupons themselves and receipts or
certificates representing interests in such stripped debt obligations and
coupons. Zero coupon securities also are issued by corporations and
financial institutions which constitute a proportionate ownership of the
issuer's pool of underlying U.S. Treasury securities. A zero coupon
security pays no interest to its holder during its life and is sold at a
discount to its face value at maturity. The amount of the discount
fluctuates with the market price of the security. The market prices of
zero coupon securities generally are more volatile than the market prices
of securities that pay interest periodically and are likely to respond to
a greater degree to changes in interest rates than non-zero coupon
securities having similar maturities and credit qualities.
Money Market Instruments--The Fund may invest in the following types of
money market instruments.
U.S. Government Securities. Securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities
include U.S. Treasury securities that differ in their interest rates,
maturities and times of issuance. Some obligations issued or guaranteed
by U.S. Government agencies and instrumentalities are supported by the
full faith and credit of the U.S. Treasury; others, by the right of the
issuer to borrow from the Treasury; others, by discretionary authority of
the U.S. Government to purchase certain obligations of the agency or
instrumentality; and others, only by the credit of the agency or
instrumentality. These securities bear fixed, floating or variable rates
of interest. While the U.S. Government provides financial support to such
U.S. Government-sponsored agencies and instrumentalities, no assurance can
be given that it will always do so since it is not so obligated by law.
Repurchase Agreements. In a repurchase agreement, the Fund
buys, and the seller agrees to repurchase, a security at a mutually agreed
upon time and price (usually within seven days). The repurchase agreement
thereby determines the yield during the purchaser's holding period, while
the seller's obligation to repurchase is secured by the value of the
underlying security. Repurchase agreements could involve risks in the
event of a default or insolvency of the other party to the agreement,
including possible delays or restrictions upon the Fund's ability to
dispose of the underlying securities. The Fund may enter into repurchase
agreements with certain banks or non-bank dealers.
Bank Obligations. The Fund may purchase certificates of
deposit, time deposits, bankers' acceptances and other short-term
obligations issued by domestic banks, foreign subsidiaries or foreign
branches of domestic banks, domestic and foreign branches of foreign
banks, domestic savings and loan associations and other banking
institutions. With respect to such securities issued by foreign
subsidiaries or foreign branches of domestic banks, and domestic and
foreign branches of foreign banks, the Fund may be subject to additional
investment risks that are different in some respects from those incurred
by a fund which invests only in debt obligations of U.S. domestic issuers.
Certificates of deposit are negotiable certificates
evidencing the obligation of a bank to repay funds deposited with it for a
specified period of time.
Time deposits are non-negotiable deposits maintained in a
banking institution for a specified period of time (in no event longer
than seven days) at a stated interest rate.
Bankers' acceptances are credit instruments evidencing the
obligation of a bank to pay a draft drawn on it by a customer. These
instruments reflect the obligation both of the bank and the drawer to pay
the face amount of the instrument upon maturity. The other short-term
obligations may include uninsured, direct obligations bearing fixed,
floating or variable interest rates.
Commercial Paper. Commercial paper consists of short-term,
unsecured promissory notes issued to finance short-term credit needs. The
commercial paper purchased by the Fund will consist only of direct
obligations which, at the time of their purchase, are (a) rated not lower
than Prime-1 by Moody's, A-1 by S&P, F-1 by Fitch or Duff-1 by Duff, (b)
issued by companies having an outstanding unsecured debt issue currently
rated at least A3 by Moody's or A- by S&P, Fitch or Duff, or (c) if
unrated, determined by The Dreyfus Corporation to be of comparable quality
to those rated obligations which may be purchased by the Fund.
Illiquid Securities--The Fund may invest up to 15% of the value of its net
assets in securities as to which a liquid trading market does not exist,
provided such investments are consistent with the Fund's investment
objective. Such securities may include securities that are not readily
marketable, such as certain securities that are subject to legal or
contractual restrictions on resale, repurchase agreements providing for
settlement in more than seven days after notice, and certain privately
negotiated, non-exchange traded options and securities used to cover such
options. As to these securities, the Fund is subject to a risk that
should the Fund desire to sell them when a ready buyer is not available at
a price the Fund deems representative of their value, the value of the
Fund's net assets could be adversely affected.
Ratings--Securities rated Ba by Moody's are judged to have speculative
elements; their future cannot be considered as well assured and often the
protection of interest and principal payments may be very moderate.
Securities rated BB by S&P, Fitch or Duff are regarded as having
predominantly speculative characteristics and, while such obligations have
less near-term vulnerability to default than other speculative grade debt,
they face major ongoing uncertainties or exposure to adverse business,
financial or economic conditions which could lead to inadequate capacity
to meet timely interest and principal payments. Securities rated Caa by
Moody's are of poor standing and may be in default or there may be present
elements of danger with respect to principal or interest. S&P, Fitch and
Duff typically assign a CCC rating to debt which has a current
identifiable vulnerability to default and is dependent upon favorable
business, financial and economic conditions to meet timely payments of
interest and repayment of principal. Such securities, though high
yielding, are characterized by great risk. See "Appendix" in the
Statement of Additional Information for a general description of
securities ratings.
The ratings of Moody's, S&P, Fitch and Duff represent their
opinions as to the quality of the obligations which they undertake to
rate. Ratings are relative and subjective and, although ratings may be
useful in evaluating the safety of interest and principal payments, they
do not evaluate the market value risk of such obligations. Although these
ratings may be an initial criterion for selection of portfolio
investments, The Dreyfus Corporation also will evaluate these securities
and the ability of the issuers of such securities to pay interest and
principal. The Fund's ability to achieve its investment objective may be
more dependent on The Dreyfus Corporation's credit analysis than might be
the case for a fund that invested in higher rated securities.
No person has been authorized to give any information or to
make any representations other than those contained in this Prospectus and
in the Fund's official sales literature in connection with the offer of
the Fund's shares, and, if given or made, such other information or
representations must not be relied upon as having been authorized by the
Fund. This Prospectus does not constitute an offer in any State in which,
or to any person to whom, such offering may not lawfully be made.
__________________________________________________________________________
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
DREYFUS SHORT TERM INCOME FUND
DREYFUS INTERMEDIATE TERM INCOME FUND
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
DECEMBER 1, 1995
__________________________________________________________________________
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of the series named above (each, a "Fund") of Dreyfus Investment Grade
Bond Funds, Inc. (the "Company"), dated December 1, 1995, as each may be
revised from time to time. To obtain a copy of the relevant Fund's
Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call the following numbers:
Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1206
Outside the U.S. and Canada -- Call 516-794-5452
The Dreyfus Corporation (the "Manager") serves as each Fund's
investment adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of each Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies. . . . . . . . . . . . . . B-2
Management of the Company . . . . . . . . . . . . . . . . . . . . . . . B-12
Management Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . B-16
Purchase of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . B-18
Shareholder Services Plan . . . . . . . . . . . . . . . . . . . . . . . B-19
Redemption of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . B-20
Shareholder Services. . . . . . . . . . . . . . . . . . . . . . . . . . B-22
Determination of Net Asset Value. . . . . . . . . . . . . . . . . . . . B-26
Dividends, Distributions and Taxes. . . . . . . . . . . . . . . . . . . B-27
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . B-28
Performance Information . . . . . . . . . . . . . . . . . . . . . . . . B-30
Information About the Funds . . . . . . . . . . . . . . . . . . . . . . B-31
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors. . . . . . . . . . . . . . . . . . . B-31
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-33
Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . B-40
Report of Independent Auditors. . . . . . . . . . . . . . . . . . . . . B-50
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the sections in each Fund's Prospectus entitled
"Description of the Fund" and "Appendix."
Portfolio Securities
Municipal Obligations. (All Funds) Municipal obligations generally
include debt obligations issued to obtain funds for various public
purposes as well as certain industrial development bonds issued by or on
behalf of public authorities. Municipal obligations are classified as
general obligation bonds, revenue bonds and notes. General obligation
bonds are secured by the issuer's pledge of its faith, credit and taxing
power for the payment of principal and interest. Revenue bonds are
payable from the revenue derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise or
other specific revenue source, but not from the general taxing power.
Industrial development bonds, in most cases, are revenue bonds and
generally do not carry the pledge of the credit of the issuing
municipality, but generally are guaranteed by the corporate entity on
whose behalf they are issued. Notes are short-term instruments which are
obligations of the issuing municipalities or agencies and are sold in
anticipation of a bond sale, collection of taxes or receipt of other
revenues. Municipal obligations include municipal lease/purchase
agreements which are similar to installment purchase contracts for
property or equipment issued by municipalities.
Mortgage-Related Securities. (All Funds)
Government-Agency Securities--Mortgage-related securities issued by the
Government National Mortgage Association ("GNMA") include GNMA Mortgage
Pass-Through Certificates (also known as "Ginnie Maes") which are
guaranteed as to the timely payment of principal and interest by GNMA and
such guarantee is backed by the full faith and credit of the United
States. GNMA is a wholly-owned U.S. Government corporation within the
Department of Housing and Urban Development. GNMA certificates also are
supported by the authority of GNMA to borrow funds from the U.S. Treasury
to make payments under its guarantee.
Government-Related Securities--Mortgage-related securities issued by the
Federal National Mortgage Association ("FNMA") include FNMA Guaranteed
Mortgage Pass-Through Certificates (also known as "Fannie Maes") which are
solely the obligations of the FNMA and are not backed by or entitled to
the full faith and credit of the United States. The FNMA is a government-
sponsored organization owned entirely by private stockholders. Fannie
Maes are guaranteed as to timely payment of principal and interest by
FNMA.
Mortgage-related securities issued by the Federal Home Loan Mortgage
Corporation ("FHLMC") include FHLMC Mortgage Participation Certificates
(also known as "Freddie Macs" or "PCs"). The FHLMC is a corporate
instrumentality of the United States created pursuant to an Act of
Congress, which is owned entirely by Federal Home Loan Banks. Freddie
Macs are not guaranteed by the United States or by any Federal Home Loan
Bank and do not constitute a debt or obligation of the United States or of
any Federal Home Loan Bank. Freddie Macs entitle the holder to timely
payment of interest, which is guaranteed by the FHLMC. The FHLMC
guarantees either ultimate collection or timely payment of all principal
payments on the underlying mortgage loans. When the FHLMC does not
guarantee timely payment of principal, FHLMC may remit the amount due on
account of its guarantee of ultimate payment of principal at any time
after default on an underlying mortgage, but in no event later than one
year after it becomes payable.
Foreign Government Obligations; Securities of Supranational Entities.
(All Funds) A Fund may invest in obligations issued or guaranteed by one
or more foreign governments or any of their political subdivisions,
agencies or instrumentalities that are determined by the Manager to be of
comparable quality to the other obligations in which the Fund may invest.
Such securities also include debt obligations of supranational entities.
Supranational entities include international organizations designated or
supported by governmental entities to promote economic reconstruction or
development and international banking institutions and related government
agencies. Examples include the International Bank for Reconstruction and
Development (the World Bank), the European Coal and Steel Community, the
Asian Development Bank and the InterAmerican Development Bank.
Repurchase Agreements. (All Funds) The Funds' custodian or sub-
custodian will have custody of, and will hold in a segregated account,
securities acquired by a Fund under a repurchase agreement. Repurchase
agreements are considered by the staff of the Securities and Exchange
Commission to be loans by the Fund. In an attempt to reduce the risk of
incurring a loss on a repurchase agreement, each Fund will enter into
repurchase agreements only with domestic banks with total assets in excess
of $1 billion, or primary government securities dealers reporting to the
Federal Reserve Bank of New York, with respect to securities of the type
in which the Fund may invest, and will require that additional securities
be deposited with it if the value of the securities purchased should
decrease below the resale price.
Commercial Paper and Other Short-Term Corporate Obligations. (All
Funds) These instruments include variable amount master demand notes,
which are obligations that permit a Fund to invest fluctuating amounts at
varying rates of interest pursuant to direct arrangements between the
Fund, as lender, and the borrower. These notes permit daily changes in
the amounts borrowed. Because these obligations are direct lending
arrangements between the lender and borrower, it is not contemplated that
such instruments generally will be traded, and there generally is no
established secondary market for these obligations, although they are
redeemable at face value, plus accrued interest, at any time.
Accordingly, where these obligations are not secured by letters of credit
or other credit support arrangements, the Fund's right to redeem is
dependent on the ability of the borrower to pay principal and interest on
demand. Such obligations frequently are not rated by credit rating
agencies, and a Fund may invest in them only if at the time of an
investment the borrower meets the criteria set forth in the Fund's
Prospectus for other commercial paper issuers.
Convertible Securities. (All Funds) Convertible securities are
fixed-income securities that may be converted at either a stated price or
stated rate into underlying shares of common stock. Convertible
securities have characteristics similar to both fixed-income and equity
securities. Convertible securities generally are subordinated to other
similar but non-convertible securities of the same issuer, although
convertible bonds, as corporate debt obligations, enjoy seniority in right
of payment to all equity securities, and convertible preferred stock is
senior to common stock, of the same issuer. Because of the subordination
feature, however, convertible securities typically have lower ratings than
similar non-convertible securities.
Although to a lesser extent than with fixed-income securities
generally, the market value of convertible securities tends to decline as
interest rates increase and, conversely, tends to increase as interest
rates decline. In addition, because of the conversion feature, the market
value of convertible securities tends to vary with fluctuations in the
market value of the underlying common stock. A unique feature of
convertible securities is that as the market price of the underlying
common stock declines, convertible securities tend to trade increasingly
on a yield basis, and so may not experience market value declines to the
same extent as the underlying common stock. When the market price of the
underlying common stock increases, the prices of the convertible
securities tend to rise as a reflection of the value of the underlying
common stock. While no securities investments are without risk,
investments in convertible securities generally entail less risk than
investments in common stock of the same issuer.
As fixed-income securities, convertible securities are investments
that provide for a stable stream of income with generally higher yields
than common stocks. As with all fixed-income securities, there can be no
assurance of current income because the issuers of the convertible
securities may default on their obligations. Convertible securities,
however, generally offer lower interest or dividend yields than non-
convertible securities of similar quality because of the potential for
capital appreciation. A convertible security, in addition to providing
fixed income, offers the potential for capital appreciation through the
conversion feature, which enables the holder to benefit from increases in
the market price of the underlying common stock. There can be no
assurance of capital appreciation, however, because securities prices
fluctuate.
Illiquid Securities. (All Funds) Where a substantial market of
qualified institutional buyers has developed for certain unregistered
securities purchased by a Fund pursuant to Rule 144A under the Securities
Act of 1933, as amended, the Fund intends to treat such securities as
liquid securities in accordance with procedures approved by the Company's
Board. Because it is not possible to predict with assurance how the
market for specific restricted securities sold pursuant to Rule 144A will
develop, the Company's Board has directed the Manager to monitor carefully
the relevant Fund's investments in such securities with particular regard
to trading activity, availability of reliable price information and other
relevant information. To the extent that, for a period of time, qualified
institutional buyers cease purchasing restricted securities pursuant to
Rule 144A, a Fund's investing in such securities may have the effect of
increasing the level of illiquidity in its investment portfolio during
such period.
Management Policies
Leverage. (All Funds) For borrowings for investment purposes, the
Investment Company Act of 1940, as amended (the "1940 Act"), requires the
Fund to maintain continuous asset coverage (that is, total assets
including borrowings, less liabilities exclusive of borrowings) of 300% of
the amount borrowed. If the required coverage should decline as a result
of market fluctuations or other reasons, the Fund may be required to sell
some of its portfolio securities within three days to reduce the amount of
its borrowings and restore the 300% asset coverage, even though it may be
disadvantageous from an investment standpoint to sell securities at that
time. Each Fund also may be required to maintain minimum average balances
in connection with such borrowing or pay a commitment or other fee to
maintain a line of credit; either of these requirements would increase the
cost of borrowing over the stated interest rate. To the extent a Fund
enters into a reverse repurchase agreement, the Fund will maintain in a
segregated custodial account cash or U.S. Government securities or other
high quality liquid debt securities at least equal to the aggregate amount
of its reverse repurchase obligations, plus accrued interest, in certain
cases, in accordance with releases promulgated by the Securities and
Exchange Commission. The Securities and Exchange Commission views reverse
repurchase transactions as collateralized borrowings by the Fund.
Lending Portfolio Securities. (All Funds) A Fund may lend securities
from its portfolio to brokers, dealers and other financial institutions.
In connection with its securities lending transactions, the Fund may
return to the borrower or a third party which is unaffiliated with the
Fund, and which is acting as a "placing broker," a part of the interest
earned from the investment of collateral received for securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral from the borrower;
(2) the borrower must increase such collateral whenever the market value
of the securities rises above the level of such collateral; (3) the Fund
must be able to terminate the loan at any time; (4) the Fund must receive
reasonable interest on the loan, as well as any interest or other
distributions payable on the loaned securities, and any increase in market
value; and (5) the Fund may pay only reasonable custodian fees in
connection with the loan.
Derivatives. (All Funds) A Fund may invest in Derivatives (as
defined in the Fund's Prospectus) for a variety of reasons, including to
hedge certain market risks, to provide a substitute for purchasing or
selling particular securities or to increase potential income gain.
Derivatives may provide a cheaper, quicker or more specifically focused
way for the Fund to invest than "traditional" securities would.
Dreyfus Intermediate Term Income Fund may invest up to 5% of its
assets, represented by the premium paid, in the purchase of call and put
options. The Fund may write (i.e., sell) covered call and put option
contracts to the extent of 20% of the value of its net assets at the time
such option contracts are written. When required by the Securities and
Exchange Commission, the Fund will set aside permissible liquid assets in
a segregated account to cover its obligations relating to its purchase of
Derivatives. To maintain this required cover, the Fund may have to sell
portfolio securities at disadvantageous prices or times since it may not
be possible to liquidate a Derivative position at a reasonable price.
Derivatives may be purchased on established exchanges or through privately
negotiated transactions referred to as over-the-counter Derivatives.
Exchange-traded Derivatives generally are guaranteed by the clearing
agency which is the issuer or counterparty to such Derivatives. This
guarantee usually is supported by a daily payment system (i.e., margin
requirements) operated by the clearing agency in order to reduce overall
credit risk. As a result, unless the clearing agency defaults, there is
relatively little counterparty credit risk associated with Derivatives
purchased on an exchange. By contrast, no clearing agency guarantees
over-the-counter Derivatives. Therefore, each party to an over-the-
counter Derivative bears the risk that the counterparty will default.
Accordingly, the Manager will consider the creditworthiness of
counterparties to over-the-counter Derivatives in the same manner as it
would review the credit quality of a security to be purchased by the Fund.
Over-the-counter Derivatives are less liquid than exchange-traded
Derivatives since the other party to the transaction may be the only
investor with sufficient understanding of the Derivative to be interested
in bidding for it.
Futures Transactions--In General. (Dreyfus Intermediate Term Income
Fund only) The Fund may enter into futures contracts in U.S. domestic
markets, such as the Chicago Board of Trade and the International Monetary
Market of the Chicago Mercantile Exchange.
Engaging in these transactions involves risk of loss to the Fund
which could adversely affect the value of the Fund's net assets. Although
the Fund intends to purchase or sell futures contracts only if there is an
active market for such contracts, no assurance can be given that a liquid
market will exist for any particular contract at any particular time.
Many futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once
the daily limit has been reached in a particular contract, no trades may
be made that day at a price beyond that limit or trading may be suspended
for specified periods during the trading day. Futures contract prices
could move to the limit for several consecutive trading days with little
or no trading, thereby preventing prompt liquidation of futures positions
and potentially subjecting the Fund to substantial losses.
Successful use of futures by the Fund also is subject to the ability
of the Manager to predict correctly movements in the direction of the
relevant market and, to the extent the transaction is entered into for
hedging purposes, to ascertain the appropriate correlation between the
transaction being hedged and the price movements of the futures contract.
For example, if the Fund uses futures to hedge against the possibility of
a decline in the market value of securities held in its portfolio and the
prices of such securities instead increase, the Fund will lose part or all
of the benefit of the increased value of securities which it has hedged
because it will have offsetting losses in its futures positions.
Furthermore, if in such circumstances the Fund has insufficient cash, it
may have to sell securities to meet daily variation margin requirements.
The Fund may have to sell such securities at a time when it may be
disadvantageous to do so.
Pursuant to regulations and/or published positions of the Securities
and Exchange Commission, the Fund may be required to segregate cash or
high quality money market instruments in connection with its commodities
transactions in an amount generally equal to the value of the underlying
commodity. The segregation of such assets will have the effect of
limiting the Fund's ability otherwise to invest those assets.
Specific Futures Transactions. The Fund may purchase and sell
interest rate futures contracts. An interest rate future obligates the
Fund to purchase or sell an amount of a specific debt security at a future
date at a specific price.
Options--In General. (Dreyfus Intermediate Term Income Fund only)
The Fund may purchase and write (i.e., sell) call or put options with
respect to specific securities. A call option gives the purchaser of the
option the right to buy, and obligates the writer to sell, the underlying
security or securities at the exercise price at any time during the option
period, or at a specific date. Conversely, a put option gives the
purchaser of the option the right to sell, and obligates the writer to
buy, the underlying security or securities at the exercise price at any
time during the option period.
A covered call option written by the Fund is a call option with
respect to which the Fund owns the underlying security or otherwise covers
the transaction by segregating cash or other securities. A put option
written by the Fund is covered when, among other things, cash or liquid
securities having a value equal to or greater than the exercise price of
the option are placed in a segregated account with the Fund's custodian to
fulfill the obligation undertaken. The principal reason for writing
covered call and put options is to realize, through the receipt of
premiums, a greater return than would be realized on the underlying
securities alone. The Fund receives a premium from writing covered call
or put options which it retains whether or not the option is exercised.
There is no assurance that sufficient trading interest to create a
liquid secondary market on a securities exchange will exist for any
particular option or at any particular time, and for some options no such
secondary market may exist. A liquid secondary market in an option may
cease to exist for a variety of reasons. In the past, for example, higher
than anticipated trading activity or order flow, or other unforeseen
events, at times have rendered certain of the clearing facilities
inadequate and resulted in the institution of special procedures, such as
trading rotations, restrictions on certain types of orders or trading
halts or suspensions in one or more options. There can be no assurance
that similar events, or events that may otherwise interfere with the
timely execution of customers' orders, will not recur. In such event, it
might not be possible to effect closing transactions in particular
options. If, as a covered call option writer, the Fund is unable to
effect a closing purchase transaction in a secondary market, it will not
be able to sell the underlying security until the option expires or it
delivers the underlying security upon exercise or it otherwise covers its
position.
Future Developments. A Fund may take advantage of opportunities in
the area of options and futures contracts and options on futures contracts
and any other Derivatives which are not presently contemplated for use by
the Fund or which are not currently available but which may be developed,
to the extent such opportunities are both consistent with the Fund's
investment objective and legally permissible for the Fund. Before
entering into such transactions or making any such investment, the Fund
will provide appropriate disclosure in its Prospectus or Statement of
Additional Information.
Forward Commitments. (All Funds) Securities purchased on a forward
commitment or when-issued basis are subject to changes in value (generally
changing in the same way, i.e., appreciating when interest rates decline
and depreciating when interest rates rise) based upon the public's
perception of the creditworthiness of the issuer and changes, real or
anticipated, in the level of interest rates. Securities purchased on a
forward commitment or when-issued basis may expose a Fund to risks because
they may experience such fluctuations prior to their actual delivery.
Purchasing securities on a when-issued basis can involve the additional
risk that the yield available in the market when the delivery takes place
actually may be higher than that obtained in the transaction itself.
Purchasing securities on a forward commitment or when-issued basis when a
Fund is fully or almost fully invested may result in greater potential
fluctuation in the value of the Fund's net assets and its net asset value
per share.
Investment Consolidations and Risks
Lower Rated Securities. (All Funds) A Fund is permitted to invest
in debt securities rated Ba and below by Moody's Investors Service, Inc.
("Moody's") or BB and below by Standard & Poor's Ratings Group, a division
of The McGraw Hill Companies, Inc. ("S&P"), Fitch Investors Service, L.P.
("Fitch") or Duff & Phelps Credit Ratings Co. ("Duff" and with Moody's,
S&P and Fitch, the "Rating Agencies") or as low as Caa by Moody's or CCC
by S&P, Fitch or Duff. Such securities, though higher yielding, are
characterized by risk. See in the Fund's Prospectus "Description of the
Fund--Investment Considerations and Risks--Lower Rated Securities" for a
discussion of certain risks and the Appendix for a general description of
the Rating Agencies' ratings. Although ratings may be useful in
evaluating the safety of interest and principal payments, they do not
evaluate the market value risk of these securities. The Fund will rely on
the Manager's judgment, analysis and experience in evaluating the
creditworthiness of an issuer.
Investors should be aware that the market values of many of these
securities tend to be more sensitive to economic conditions than are
higher rated securities. These securities generally are considered by the
Rating Agencies to be, on balance, predominantly speculative with respect
to capacity to pay interest and repay principal in accordance with the
terms of the obligation and generally will involve more credit risk than
securities in the higher rating categories.
Companies that issue certain of these securities often are highly
leveraged and may not have available to them more traditional methods of
financing. Therefore, the risk associated with acquiring the securities
of such issuers generally is greater than is the case with the higher
rated securities. For example, during an economic downturn or a sustained
period of rising interest rates, highly leveraged issuers of these
securities may not have sufficient revenues to meet their interest payment
obligations. The issuer's ability to service its debt obligations also
may be affected adversely by specific corporate developments, forecasts,
or the unavailability of additional financing. The risk of loss because
of default by the issuer is significantly greater for the holders of these
securities because such securities generally are unsecured and often are
subordinated to other creditors of the issuer.
Because there is no established retail secondary market for many of
these securities, the Fund anticipates that such securities could be sold
only to a limited number of dealers or institutional investors. To the
extent a secondary trading market for these securities does exist, it
generally is not as liquid as the secondary market for higher rated
securities. The lack of a liquid secondary market may have an adverse
impact on market price and yield and the Fund's ability to dispose of
particular issues when necessary to meet the Fund's liquidity needs or in
response to a specific economic event such as a deterioration in the
creditworthiness of the issuer. The lack of a liquid secondary market for
certain securities also may make it more difficult for the Fund to obtain
accurate market quotations for purposes of valuing the Fund's portfolio
and calculating its net asset value. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease
the values and liquidity of these securities. In such cases, judgment may
play a greater role in valuation because less reliable, objective data may
be available.
These securities may be particularly susceptible to economic
downturns. It is likely that an economic recession could disrupt severely
the market for such securities and may have an adverse impact on the value
of such securities. In addition, it is likely that any such economic
downturn could adversely affect the ability of the issuers of such
securities to repay principal and pay interest thereon and increase the
incidence of default for such securities.
The Fund may acquire these securities during an initial offering.
Such securities may involve special risks because they are new issues.
The Fund has no arrangement with any persons concerning the acquisition of
such securities, and the Manager will review carefully the credit and
other characteristics pertinent to such new issues.
Investment Restrictions
Each Fund has adopted investment restrictions numbered 1 through 7 as
fundamental policies. In addition, Dreyfus Intermediate Term Income Fund
has adopted investment restrictions numbered 14 and 15 as fundamental
policies. These restrictions cannot be changed, as to a Fund, without
approval by the holders of a majority (as defined in the 1940 Act) of such
Fund's outstanding voting shares. Investment restrictions numbered 8
through 13 are not fundamental policies and may be changed by vote of a
majority of the Company's Board members at any time. Neither Fund may:
1. Invest in commodities, except that the Fund may purchase and
sell futures contracts, including those relating to indices, and options
on futures contracts or indices.
2. Purchase, hold or deal in real estate, or oil, gas or other
mineral leases or exploration or development programs, but the Fund may
purchase and sell securities that are secured by real estate or issued by
companies that invest or deal in real estate. In particular, the Fund may
purchase mortgage-backed securities and real estate investment trust
securities.
3. Borrow money, except to the extent permitted under the 1940 Act
(which currently limits borrowing to no more than 33-1/3% of the value of
the Fund's total assets). For purposes of this Investment Restriction,
the entry into options, futures contracts, including those relating to
indices, and options on futures contracts or indices shall not constitute
borrowing.
4. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements. However, the Fund
may lend its portfolio securities in an amount not to exceed 33-1/3% of
the value of its total assets. Any loans of portfolio securities will be
made according to guidelines established by the Securities and Exchange
Commission and the Company's Board.
5. Act as an underwriter of securities of other issuers, except to
the extent the Fund may be deemed an underwriter under the Securities Act
of 1933, as amended, by virtue of disposing of portfolio securities.
6. Invest more than 25% of the value of its total assets in the
securities of issuers in any single industry, provided that there shall be
no limitation on the purchase of obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities.
7. Issue any senior security (as such term is defined in Section
18(f) of the 1940 Act), except to the extent the activities permitted in
Investment Restriction Nos. 1, 3, and 9 may be deemed to give rise to a
senior security.
8. Invest in the securities of a company for the purpose of
exercising management or control, but the Fund will vote the securities it
owns in its portfolio as a shareholder in accordance with its views.
9. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
purchase of securities on a when-issued or forward commitment basis and
the deposit of assets in escrow in connection with writing covered put and
call options and collateral and initial or variation margin arrangements
with respect to options, futures contracts, including those relating to
indices, and options on futures contracts or indices.
10. Purchase, sell or write puts, calls or combinations thereof.
11. Enter into repurchase agreements providing for settlement in
more than seven days after notice or purchase securities which are
illiquid, if, in the aggregate, more than 15% of the value of the Fund's
net assets would be so invested.
12. Purchase securities of other investment companies, except to the
extent permitted under the 1940 Act or as they may be acquired as part of
a merger, consolidation or acquisition of assets.
13. Purchase securities on margin, but the Fund may make margin
deposits in connection with transactions in futures, including those
relating to indices, and options on futures or indices.
The following investment restrictions numbered 14 and 15 apply only
to Dreyfus Intermediate Term Income Fund. Dreyfus Intermediate Term
Income Fund may not:
14. Invest more than 5% of its assets in the obligations of any
single issuer, except that up to 25% of the value of the Fund's total
assets may be invested, and securities issued or guaranteed by the U.S.
Government, or its agencies or instrumentalities may be purchased, without
regard to any such limitation.
15. Hold more than 10% of the outstanding voting securities of any
single issuer. This Investment Restriction applies only with respect to
75% of the Fund's total assets.
If a percentage restriction is adhered to at the time of investment,
a later change in percentage resulting from a change in values or assets
will not constitute a violation of
such restriction.
The Company may make commitments more restrictive than the
restrictions listed above so as to permit the sale of Fund shares in
certain states. Should the Company determine that a commitment is no
longer in the best interest of the Fund and its shareholders, the Company
reserves the right to revoke the commitment by terminating the sale of
such Fund's shares in the state involved.
MANAGEMENT OF THE COMPANY
Directors and officers of the Company, together with information as
to their principal business occupations during at least the last five
years, are shown below. Each Director who is deemed to be an "interested
person" of the Company, as defined in the 1940 Act, is indicated by an
asterisk.
Directors of the Company
LUCY WILSON BENSON, Director. President of Benson and Associates,
consultants to business and government. Mrs. Benson is a director of
Communications Satellite Corporation, General Re Corporation and
Logistics Management Institute. She is also a trustee of the Alfred
P. Sloan Foundation, Vice Chairman of the Board of Trustees of
Lafayette College, Vice Chairman of the Citizens Network for Foreign
Affairs and a member of the Council on Foreign Relations. From 1980
to 1994, Mrs. Benson was a director of the Gruman Corporation. Mrs.
Benson served as a consultant to the U.S. Department of State and to
SRI International from 1980 to 1981. From 1977 to 1980, she was
Under Secretary of State for Security Assistance, Science and
Technology. She is 68 years old and her address is 46 Sunset Avenue,
Amherst, Massachusetts 01002.
*DAVID W. BURKE, Director. Consultant to the Manager since August 1994.
From October 1990 to August 1994, he was Vice President and Chief
Administrative Officer of the Manager. From 1977 to 1990, Mr. Burke
was involved in the management of national television news, as Vice
President and Executive Vice President of ABC News, and subsequently
as President of CBS News. He is 59 years old and his address is 200
Park Avenue, New York, New York 10166.
*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman
of the Board of various funds in the Dreyfus Family of Funds. For
more than five years prior thereto, he was President, a director and,
until August 1994, Chief Operating Officer of the Manager and
Executive Vice President and a director of Dreyfus Service
Corporation, a wholly-owned subsidiary of the Manager and, until
August 24, 1994, the Company's distributor. From August 1994 until
December 31, 1994, he was a director of Mellon Bank Corporation. He
is also Chairman of the Board of Directors of Noel Group, Inc., a
venture capital company; a trustee of Bucknell University; and a
director of The Muscular Dystrophy Association, HealthPlan Services
Corporation, Belding Heminway Company, Inc., Curtis Industries, Inc.,
Simmons Outdoor Corporation and Staffing Resources, Inc. He is 52
years old and his address is 200 Park Avenue, New York, New York
10166.
MARTIN D. FIFE, Director. Chairman of the Board of Magar, Inc., a company
specializing in financial products and developing early stage
companies. In addition, Mr. Fife is Chairman of the Board and Chief
Executive Officer of Skysat Communications Network Corporation, a
company developing telecommunications systems. Mr. Fife also serves
on the boards of various other companies. Mr. Fife is 68 years old
and his address if 405 Lexington Avenue, New York, New York 10174.
WHITNEY I. GERARD, Director. Partner of the New York City law firm of
Chadbourne & Parke. He is 61 years old and his address is 30
Rockefeller Plaza, New York, New York 10112.
ROBERT R. GLAUBER, Director. Research Fellow, Center for Business and
Government at the John F. Kennedy School of Government, Harvard
University since January 1992. Mr. Glauber was Under Secretary of
the Treasury for Finance at the U.S. Treasury Department from May
1989 to January 1992. For more than five years prior thereto, he was
a Professor of Finance at the Graduate School of Business
Administration of Harvard University and, from 1985 to 1989, Chairman
of its Advanced Management Program. He is 56 years old and his
address is 79 John F. Kennedy Street, Cambridge, Massachusetts 02138.
ARTHUR A. HARTMAN, Director. Senior consultant with APCO Associates Inc.
From 1981 to 1987, he was United States Ambassador to the former
Soviet Union. He is a director of the Hartford Insurance Group and a
member of the advisory councils of several other companies, research
institutes and foundations. Ambassador Hartman is Chairman of First
NIS Regional Funds (ING/Barings Management). He is a former
President of the Harvard Board of Overseers. He is 69 years old and
his address is 2738 McKinley Street, N.W., Washington, D.C. 20015.
GEORGE L. PERRY, Director. An economist and Senior Fellow at the
Brookings Institution since 1969. He is co-director of the Brookings
Panel on Economic Activity and editor of its journal, The Brookings
Papers. He is also a director of the State Farm Mutual Automobile
Association and State Farm Life Insurance Company. He is 61 years
old and his address is 1775 Massachusetts Avenue, N.W., Washington,
D.C. 20036.
PAUL D. WOLFOWITZ, Director. Dean of The Paul H. Nitze School of Advanced
International Studies at Johns Hopkins University. From 1989 to
1993, he was Under Secretary of Defense for Policy. From 1986 to
1989, he was the U.S. Ambassador to the Republic of Indonesia. From
1982 to 1986, he was Assistant Secretary of State of East Asian and
Pacific Affairs of the Department of State. He is 51 years old and
his address is 1740 Massachusetts Avenue, N.W., Washington, D.C.
20036.
For so long as the Company's plan described in the section captioned
"Shareholder Services Plan" remains in effect, the Board members who are
not "interested persons" of the Company, as defined in the 1940 Act, will
be selected and nominated by the Board members who are not "interested
persons" of the Company.
The Company typically pays its Board members an annual retainer and a
per meeting fee and reimburses them for their expenses. The Chairman of
the Board receives an additional 25% of such compensation. Emeritus Board
members are entitled to receive an annual retainer and a per meeting fee
of one-half the amount paid to them as Board members. The aggregate
amount of compensation paid to each Board member by the Company for the
fiscal year ended July 31, 1995, and by all other funds in the Dreyfus
Family of Funds for which such person is a Board member (the number of
which is set forth in parenthesis next to each Board member's total
compensation) for the year ended December 31, 1994, were as follows:
<TABLE>
<CAPTION>
(5)
(3) Total Compensation
(2) Pension or (4) From Company and
(1) Aggregate Retirement Benefits Estimated Annual Fund Complex
Name of Board Compensation Accrued as Part of Benefits Upon Paid to Board
Member From Company* Company's Expenses Retirement Member
______________ _____________ ____________________ _________________ ___________________
<S> <C> <C> <C> <C>
Lucy Wilson Benson $5,000 none none $ 64,459 (15)
David W. Burke $5,000 none none $ 27,898 (53)
Joseph S. DiMartino $2,791 none none $445,000**(93)
Martin D. Fife $5,000 none none $ 51,750 (12)
Whitney I. Gerard $5,000 none none $ 52,000 (12)
Robert R. Glauber $4,375 none none $ 79,696 (21)
Arthur A. Hartman $5,000 none none $ 52,000 (12)
George L. Perry $5,000 none none $ 52,000 (12)
Paul D. Wolfowitz $5,000 none none $ 32,631 (11)
</TABLE>
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $871 for all Board members as a group.
** Estimated amount for the year ending December 31, 1995.
Officers of the Company
MARIE E. CONNOLLY, President and Treasurer. President and Chief Operating
Officer of the Distributor and an officer of other investment
companies advised or administered by the Manager. From December 1991
to July 1994, she was President and Chief Compliance Officer of Funds
Distributor, Inc., the ultimate parent of which is Boston
Institutional Group, Inc. Prior to December 1991, she served as Vice
President and Controller, and later as Senior Vice President, of The
Boston Company Advisors, Inc. She is 37 years old.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President
and General Counsel of the Distributor and an officer of other
investment companies advised or administered by the Manager. From
February 1992 to July 1994, he served as Counsel for The Boston
Company Advisors, Inc. From August 1990 to February 1992, he was
employed as an Associate at Ropes & Gray. He is 31 years old.
FREDERICK C. DEY, Vice President and Assistant Treasurer. Senior Vice
President of the Distributor and an officer of other investment
companies advised or administered by the Manager. From 1988 to
August 1994, he was manager of the High Performance Fabric Division
of Springs Industries Inc. He is 33 years old.
ELIZABETH BACHMAN, Assistant Secretary. Counsel to Funds Distributor,
Inc. and Premier Mutual Fund Services, Inc.. From September 1992 to
May 1995, she was enrolled at the Fordam University School of Law,
from which she received her J.D. Prior to September 1992, she was an
Assistant at the National Association for Public Interest Law. She
received her B.S. from Cornell University in May 1991.
ERIC B. FISCHMAN, Vice President and Assistant Secretary. Associate
General Counsel of the Distributor and an officer of other investment
companies advised or administered by the Manager. From September
1992 to August 1994, he was an attorney with the Board of Governors
of the Federal Reserve System. He is 30 years old.
JOSEPH S. TOWER, III, Assistant Treasurer. Senior Vice President,
Treasurer and Chief Financial Officer of the Distributor and an
officer of other investment companies advised or administered by the
Manager. From July 1988 to August 1994, he was employed by The
Boston Company, Inc. where he held various management positions in
the Corporate Finance and Treasury areas. He is 33 years old.
JOHN J. PYBURN, Assistant Treasurer. Assistant Treasurer of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From 1984 to July 1994, he was
Assistant Vice President in the Mutual Fund Accounting Department of
the Manager. He is 59 years old.
MARGARET PARDO, Assistant Secretary. Legal Assistant with the Distributor
and an officer of other investment companies advised or administered
by Dreyfus. From June 1992 to April 1995, she was a Medical
coordination Officer at ORBIS International. Prior to June 1992, she
worked as Program Coordinator at Physicians World Communications
Group. She is 27 years old.
The address of each officer of the Company is 200 Park Avenue, New
York, New York 10166.
The Company's Board members and officers, as a group, owned less than
1% of each Fund's shares of common stock outstanding on November 2, 1995.
MANAGEMENT AGREEMENT
The following information supplements and should be read in
conjunction with the section in each Fund's Prospectus entitled
"Management of the Company."
Management Agreement. The Manager provides management services
pursuant to the Management Agreement (the "Agreement") dated August 24,
1994, as amended August 24, 1995, with the Company. As to each Fund, the
Agreement is subject to annual approval by (i) the Company's Board or (ii)
vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities of such Fund, provided that in either event the continuance
also is approved by a majority of the Board members who are not
"interested persons" (as defined in the 1940 Act) of the Company or the
Manager, by vote cast in person at a meeting called for the purpose of
voting on such approval. The Agreement was approved by shareholders on
August 4, 1994 in respect of Dreyfus Short Term Income Fund and was last
approved by the Company's Board, including a majority of the Board members
who are not "interested persons" of any party to the Agreement, at a
meeting held on August 24, 1995. As to each Fund, the Agreement is
terminable without penalty, on 60 days' notice, by the Company's Board or
by vote of the holders of a majority of such Fund's shares, or, on not
less than 90 days' notice, by the Manager. The Agreement will terminate
automatically, as to the relevant Fund, in the event of its assignment (as
defined in the 1940 Act).
The following persons are officers and/or directors of the Manager:
Howard Stein, Chairman of the Board and Chief Executive Officer; W. Keith
Smith, Vice Chairman of the Board; Christopher M. Condron, President,
Chief Operating Officer and a director; Stephen E. Canter, Vice Chairman,
Chief Investment Officer and a director; Lawrence S. Kash, Vice Chairman-
- -Distribution and a director; Philip L. Toia, Vice Chairman--Operations
and Administration and a director; Daniel C. Maclean, Vice President and
General Counsel; Barbara E. Casey, Vice President--Dreyfus Retirement
Services; Diane M. Coffey, Vice President--Corporate Communications; Elie
M. Genadry, Vice President--Institutional Sales; William F. Glavin, Jr.,
Vice President--Corporate Development; Henry D. Gottmann, Vice President-
- -Retail Sales and Services; Mark N. Jacobs, Vice President--Fund Legal and
Secretary; Jeffrey N. Nachman, Vice President--Mutual Fund Accounting;
Andrew S. Wasser, Vice President--Information Services; Katherine C.
Wickham, Vice President--Human Resources; Maurice Bendrihem, Controller;
Elvira Oslapas, Assistant Secretary; and Mandell L. Berman, Frank V.
Cahouet, Alvin E. Friedman, Lawrence M. Greene, Julian M. Smerling and
David B. Truman, directors.
The Manager manages each Fund's investments in accordance with the
stated policies of such Fund, subject to the approval of the Company's
Board. The Manager is responsible for investment decisions, and provides
the Funds with portfolio managers who are authorized by the Board to
execute purchases and sales of securities. The Funds' portfolio managers
are Garitt Kono and Gerald Thunelius (with respect to Dreyfus Short Term
Income Fund) and Kevin M. McClintock (with respect to Dreyfus Intermediate
Term Income Fund). The Manager also maintains research departments with a
professional staff of portfolio managers and securities analysts who
provide research services for the Fund as well as for other funds advised
by the Manager. All purchases and sales are reported for the Board's
review at the meeting subsequent to such transactions.
The Manager maintains office facilities on behalf of the Funds, and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Funds. The Manager also may make such advertising and
promotional expenditures, using its own resources, as it from time to time
deems appropriate.
Expenses. All expenses incurred in the operation of the Company are
borne by the Company, except to the extent specifically assumed by the
Manager. The expenses borne by the Company include: organizational
costs, taxes, interest, loan commitment fees, interest and distributions
paid on securities sold short, brokerage fees and commissions, if any,
fees of Board members who are not officers, directors, employees or
holders of 5% or more of the outstanding voting securities of the Manager,
Securities and Exchange Commission fees, state Blue Sky qualification
fees, advisory fees, charges of custodians, transfer and dividend
disbursing agents' fees, certain insurance premiums, industry association
fees, outside auditing and legal expenses, costs of maintaining the
Company's existence, costs of independent pricing services, costs
attributable to investor services (including, without limitation,
telephone and personnel expenses), costs of preparing and printing
prospectuses and statements of additional information for regulatory
purposes and for distribution to existing shareholders, costs of
shareholders' reports and meetings, and any extraordinary expenses. In
addition, the Company is subject to an annual service fee for ongoing
personal services relating to shareholder accounts and services related to
the maintenance of shareholder accounts. See "Shareholder Services Plan."
Expenses attributable to a particular Fund are charged against the assets
of that Fund; other expenses of the Company are allocated among the Funds
on the basis determined by the Board, including, but not limited to,
proportionately in relation to the net assets of each Fund.
As compensation for the Manager's services to the Company, the
Company has agreed to pay the Manager a monthly management fee at the
annual rate of .50 of 1% of the value of Dreyfus Short Term Income Fund's
average daily net assets and .75 of 1% of the value of Dreyfus
Intermediate Term Income Fund's average daily net assets. For the period
August 18, 1992 (commencement of operations) through July 31, 1993 and for
the fiscal years ended July 31, 1994 and 1995, the management fees payable
with respect to Dreyfus Short Term Income Fund amounted to $428,814,
$1,431,860 and $1,156,674, respectively; however, pursuant to an
undertaking in effect, the Manager waived receipt of $428,814, $1,431,860
and $682,003 for fiscal 1993, 1994 and 1995, respectively, resulting in no
management fee being paid in fiscal 1993 and 1994 and $474,671 being paid
in fiscal 1995 with respect to Dreyfus Short Term Income Fund.
As to each Fund, the Manager has agreed that if in any fiscal year
the aggregate expenses of the Fund, exclusive of taxes, brokerage,
interest on borrowings and (with the prior written consent of the
necessary state securities commissions) extraordinary expenses, but
including the management fee, exceed the expense limitation of any state
having jurisdiction over the Fund, the Fund may deduct from the payment to
be made to the Manager under the Agreement, or the Manager will bear, such
excess expense to the extent required by state law. Such deduction or
payment, if any, will be estimated daily, and reconciled and effected or
paid, as the case may be, on a monthly basis.
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of a Fund's net assets increases.
PURCHASE OF SHARES
The following information supplements and should be read in
conjunction with the section in each Fund's Prospectus entitled "How to
Buy Shares."
The Distributor. The Distributor serves as each Fund's distributor
on a best efforts basis pursuant to an agreement which is renewable
annually. The Distributor also acts as distributor for the other funds in
the Dreyfus Family of Funds and for certain other investment companies.
In some states, certain financial institutions effecting transactions in
Fund shares may be required to register as dealers pursuant to state law.
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase orders
may be made at any time. Purchase orders received by 4:00 P.M., New York
time, on any business day that Dreyfus Transfer, Inc., the Fund's transfer
and dividend disbursing agent (the "TransferAgent"), and the New York
Stock Exchange are open for business will be credited to the shareholder's
Fund account on the next bank business day following such purchase order.
Purchase orders made after 4:00 P.M., New York time, on any business day
the Transfer agent and the New York Stock Exchange are open for business,
or orders made on Saturday, Sunday or any Fund holiday (e.g., when the New
York Stock Exchange is not open for business), will be credited to the
shareholder's Fund account on the second bank business day following such
purchase order. To qualify to use the Dreyfus TeleTransfer Privilege, the
initial payment for purchase of shares must be drawn on, and redemption
proceeds paid to, the same bank and account as are designated on the
Account Application or Shareholder Services Form on file. If the proceeds
of a particular redemption are to be wired to an account at any other
bank, the request must be in writing and signature-guaranteed. See
"Redemption of Shares--Dreyfus TeleTransfer Privilege."
Reopening an Account. An investor may reopen an account with a
minimum investment of $100 without filing a new Account Application during
the calendar year the account is closed or during the following calendar
year, provided the information on the old Account Application is still
applicable.
SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in
conjunction with the section in each Fund's Prospectus entitled
"Shareholder Services Plan."
The Company has adopted a Shareholder Services Plan, pursuant to
which the Company pays the Distributor for the provision of certain
services to each Fund's shareholders. The services provided may include
personal services relating to shareholder accounts, such as answering
shareholder inquiries regarding the Company and providing reports and
other information, and services related to the maintenance of such
shareholder accounts. Under the Shareholder Services Plan, the
Distributor may make payments to certain securities dealers, financial
institutions and other financial industry professionals (collectively,
"Service Agents") in respect of these services.
A quarterly report of the amounts expended under the Shareholder
Services Plan, and the purposes for which such expenditures were incurred,
must be made to the Board members for their review. In addition, the
Shareholder Services Plan provides that it may be amended only with the
approval of the Board members, and by the Board members who are neither
"interested persons" (as defined in the 1940 Act) of the Company nor have
any direct or indirect financial interest in the operation of the
Shareholder Services Plan or in any agreements entered into in connection
with the Shareholder Services Plan, by vote cast in person at a meeting
called for the purpose of considering such amendments. As to each Fund,
the Shareholder Services Plan is subject to annual approval by such vote
of the Board members cast in person at a meeting called for the purpose of
voting on the Shareholder Services Plan. The Shareholder Services Plan
was so approved on August 24, 1995. The Shareholder Services Plan is
terminable with respect to each Fund at any time by vote of a majority of
the Board members who are not "interested persons" and who have no direct
or indirect financial interest in the operation of the Shareholder
Services Plan or in any agreements entered into in connection with the
Shareholder Services Plan.
Prior Service Plan. As of October 1, 1995, the Company terminated
its then-existing Service Plan that had been in effect from August 24,
1994 with respect to Dreyfus Short Term Income Fund only. The Service
Plan, adopted pursuant to Rule 12b-1 under the 1940 Act, provided that the
Company (i) reimburse the Distributor for payments to Service Agents for
distributing shares and servicing shareholder accounts ("Servicing") and
(ii) pay the Manager, Dreyfus Service Corporation and any affiliate of
either of them (collectively, "Dreyfus") for advertising and marketing
relating to the Company and for Servicing, at an aggregate annual rate of
.20 of 1% of the value of Dreyfus Short Term Income Fund's average daily
net assets. Under such plan, for the period August 24, 1994 through July
31, 1995, the total amount payable by the Company was $430,949, of which
$103,526 was waived by the Fund, all of which was payable to Dreyfus for
advertising and marketing Dreyfus Short Term Income Fund's shares and
Servicing. In addition, the Company paid $43,573 for preparing, printing
and distributing prospectuses and statements of additional information and
for costs associated with implementing and operating such plan.
As of August 24, 1994, the Company terminated its then-existing
Service Plan, which provided for payments to be made to Dreyfus Service
Corporation, the Company's distributor prior to such date, for
advertising, marketing and distributing Dreyfus Short Term Income Fund's
shares and for Servicing at an annual rate of .20 of 1% of the value of
the Fund's total assets. For the period from August 1, 1994 through
August 23, 1994, the total amount payable by the Company under such plan
was $43,686, of which $31,721 was payable for advertising, marketing and
distributing Fund shares and Servicing and $11,965 was payable for
preparing, printing and distributing prospectuses and statements of
additional information and operating such plan.
REDEMPTION OF SHARES
The following information supplements and should be read in
conjunction with the section in each Fund's Prospectus entitled "How to
Redeem Shares."
Check Redemption Privilege. An investor may indicate on the Account
Application Shareholder Services Plan or by later written request that the
Company provide Redemption Checks ("Checks") drawn on the investor's
account. Checks will be sent only to the registered owner(s) of the
account and only to the address of record. The Account Application or
later written request must be manually signed by the registered owner(s).
Checks may be made payable to the order of any person in an amount of $500
or more. When a Check is presented to the Transfer Agent for payment, the
Transfer Agent, as the investor's agent, will cause the Fund to redeem a
sufficient number of shares in the investor's account to cover the amount
of the Check. Dividends are earned until the Check clears. After
clearance, a copy of the Check will be returned to the investor.
Investors generally will be subject to the same rules and regulations that
apply to checking accounts, although election of this Privilege creates
only a shareholder-transfer agent relationship with the Transfer Agent.
If the amount of the Check is greater than the value of the shares in
an investor's account, the Check will be returned marked insufficient
funds. Checks should not be used to close an account.
Wire Redemption Privilege. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire or telephone redemption
instructions from any person representing himself or herself to be the
investor and reasonably believed by the Transfer Agent to be genuine.
Ordinarily, the Company will initiate payment for shares redeemed pursuant
to this Privilege on the next business day after receipt by the Transfer
Agent of the redemption request in proper form. Redemption proceeds
($1,000 minimum) will be transferred by Federal Reserve wire only to the
commercial bank account specified by the investor on the Account
Application or Shareholder Services Form, or to a correspondent bank if
the investor's bank is not a member of the Federal Reserve System. Fees
ordinarily are imposed by such bank and usually are borne by the investor.
Immediate notification by the correspondent bank to the investor's bank is
necessary to avoid a delay in crediting the funds to the investor's bank
account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contacting a TRT Cables operator at
1-800-654-7171, toll free. Investors should advise the operator that the
above transmittal code must be used and should also inform the operator of
the Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Stock Certificates; Signatures."
Dreyfus TeleTransfer Privilege. Investors should be aware that if
they have selected the Dreyfus TeleTransfer Privilege, any request for a
wire redemption will be effected as a Dreyfus TeleTransfer transaction
through the Automated Clearing House ("ACH") system unless more prompt
transmittal specifically is requested. Redemption proceeds will be on
deposit in the investor's account at an ACH member bank ordinarily two
business days after receipt of the redemption request. See "Purchase of
Shares--Dreyfus TeleTransfer Privilege."
Stock Certificates; Signatures. Any certificates representing Fund
shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each holder of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing
agencies and savings associations, as well as from participants in the New
York Stock Exchange Medallion Signature Program, the Securities Transfer
Agents Medallion Program ("STAMP") and the Stock Exchanges Medallion
Program. Guarantees must be signed by an authorized signatory of the
guarantor and "Signature-Guaranteed" must appear with the signature. The
Transfer Agent may request additional documentation from corporations,
executors, administrators, trustees or guardians, and may accept other
suitable verification arrangements from foreign investors, such as
consular verification. For more information with respect to
signature-guarantees, please call one of the telephone numbers listed on
the cover.
Redemption Commitment. The Company has committed itself to pay in
cash all redemption requests by any shareholder of record of a Fund,
limited in amount during any 90-day period to the lesser of $250,000 or 1%
of the value of such Fund's net assets at the beginning of such period.
Such commitment is irrevocable without the prior approval of the
Securities and Exchange Commission. In the case of requests for
redemption in excess of such amount, the Board reserves the right to make
payments in whole or in part in securities or other assets in case of an
emergency or any time a cash distribution would impair the liquidity of
the Fund to the detriment of the existing shareholders. In such event,
the securities would be valued in the same manner as the Fund's securities
are valued. If the recipient sold such securities, brokerage charges
would be incurred.
Suspension of Redemptions. The right of redemption may be suspended
or the date of payment postponed (a) during any period when the New York
Stock Exchange is closed (other than customary weekend and holiday
closings), (b) when trading in the markets the relevant Fund ordinarily
utilizes is restricted, or when an emergency exists as determined by the
Securities and Exchange Commission so that disposal of the Fund's
investments or determination of its net asset value is not reasonably
practicable, or (c) for such other periods as the Securities and Exchange
Commission by order may permit to protect the Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in
conjunction with the section in each Fund's Prospectus entitled
"Shareholder Services."
Fund Exchanges. Shares of funds purchased by exchange will be
purchased on the basis of relative net asset value per share as follows:
A. Exchanges for shares of funds that are offered without a sales
load will be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged
for shares of other funds sold with a sales load, and the
applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a
sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a
sales load and additional shares acquired through reinvestment
of dividends or distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred to herein
as "Offered Shares"), provided that, if the sales load
applicable to the Offered Shares exceeds the maximum sales load
that could have been imposed in connection with the Purchased
Shares (at the time the Purchased Shares were acquired), without
giving effect to any reduced loads, the difference will be
deducted.
To accomplish an exchange under item D above, shareholders must
notify the Transfer Agent of their prior ownership of fund shares and
their account number.
To request an exchange, shareholders must give exchange instructions
to the Transfer Agent in writing or by telephone. The ability to issue
exchange instructions by telephone is given to all Fund shareholders
automatically, unless the investor checks the applicable "No" box on the
Account Application, indicating that the investor specifically refuses
this Privilege. By using the Telephone Exchange Privilege, the investor
authorizes the Transfer Agent to act on telephonic instructions from any
person representing himself or herself to be the investor, and reasonably
believed by the Transfer Agent to be genuine. Telephone exchanges may be
subject to limitations as to the amount involved or the number of
telephone exchanges permitted. Shares issued in certificate form are not
eligible for telephone exchange.
To establish a personal retirement plan by exchange, shares of the
fund being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made.
For Dreyfus-sponsored Keogh Plans, IRAs and IRAs set up under a Simplified
Employee Pension Plan ("SEP-IRAs") with only one participant, the minimum
initial investment is $750. To exchange shares held in corporate plans,
403(b)(7) Plans and SEP-IRAs with more than one participant, the minimum
initial investment is $100 if the plan has at least $2,500 invested among
the funds in the Dreyfus Family of Funds. To exchange shares held in a
personal retirement plan account, the shares exchanged must have a current
value of at least $100.
Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange Privilege
permits an investor to purchase, in exchange for shares of a Fund, shares
of another fund in the Dreyfus Family of Funds. This Privilege is
available only for existing accounts. Shares will be exchanged on the
basis of relative net asset value as described above under "Fund
Exchanges." Enrollment in or modification or cancellation of this
Privilege is effective three business days following notification by the
investor. An investor will be notified if the investor's account falls
below the amount designated to be exchanged under this Privilege. In this
case, an investor's account will fall to zero unless additional
investments are made in excess of the designated amount prior to the next
Auto-Exchange transaction. Shares held under IRA and other retirement
plans are eligible for this Privilege. Exchanges of IRA shares may be
made between IRA accounts and from regular accounts to IRA accounts, but
not from IRA accounts to regular accounts. With respect to all other
retirement accounts, exchanges may be made only among those accounts.
Fund Exchanges and the Dreyfus Auto-Exchange Privilege are available
to shareholders resident in any state in which shares of the fund being
acquired may legally be sold. Shares may be exchanged only between
accounts having identical names and other identifying designations.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-645-6561. The Company reserves the right to
reject any exchange request in whole or in part. The Fund Exchanges
service or the Dreyfus Auto-Exchange Privilege may be modified or
terminated at any time upon notice to shareholders.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly
basis. Withdrawal payments are the proceeds from sales of Fund shares,
not the yield on the shares. If withdrawal payments exceed reinvested
dividends and distributions, the investor's shares will be reduced and
eventually may be depleted. There is a service charge of $.50 for each
withdrawal check. Automatic Withdrawal may be terminated at any time by
the investor, the Company or the Transfer Agent. Shares for which
certificates have been issued may not be redeemed through the Automatic
Withdrawal Plan.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows investors to
invest on the payment date their dividends or dividends and capital gain
distributions, if any, from a Fund in shares of another fund in the
Dreyfus Family of Funds of which the investor is a shareholder. Shares of
other funds purchased pursuant to this privilege will be purchased on the
basis of relative net asset value per share as follows:
A. Dividends and distributions paid by a fund may be invested
without imposition of a sales load in shares of other funds that
are offered without a sales load.
B. Dividends and distributions paid by a fund which does not charge
a sales load may be invested in shares of other funds sold with
a sales load, and the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund which charges a sales
load may be invested in shares of other funds sold with a sales
load (referred to herein as "Offered Shares"), provided that, if
the sales load applicable to the Offered Shares exceeds the
maximum sales load charged by the fund from which dividends or
distributions are being swept, without giving effect to any
reduced loads, the difference will be deducted.
D. Dividends and distributions paid by a fund may be invested in
shares of other funds that impose a contingent deferred sales
charge ("CDSC") and the applicable CDSC, if any, will be imposed
upon redemption of such shares.
Corporate Pension/Profit-Sharing and Retirement Plans. The Company
makes available to corporations a variety of prototype pension and profit-
sharing plans including a 401(k) Salary Reduction Plan. In addition, the
Company makes available Keogh Plans, IRAs, including SEP-IRAs and IRA
"Rollover Accounts," and 403(b)(7) Plans. Plan support services also are
available.
Investors who wish to purchase Fund shares in conjunction with a
Keogh Plan, a 403(b)(7) Plan or an IRA, including a SEP-IRA, may request
from the Distributor forms for adoption of such plans.
The entity acting as custodian for Keogh Plans, 403(b)(7) Plans or
IRAs may charge a fee, payment of which could require the liquidation of
shares. All fees charged are described in the appropriate form.
Shares may be purchased in connection with these plans only by direct
remittance to the entity acting as custodian. Purchases for these plans
may not be made in advance of receipt of funds.
The minimum initial investment for corporate plans, Salary Reduction
Plans, 403(b)(7) Plans and SEP-IRAs with more than one participant, is
$2,500 with no minimum for subsequent purchases. The minimum initial
investment for Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs and 403(b)(7)
Plans with only one participant, is ordinarily $750, with no minimum for
subsequent purchases. Individuals who open an IRA also may open a
non-working spousal IRA with a minimum investment of $250.
Each investor should read the prototype retirement plan and the
appropriate form of custodial agreement for further details on
eligibility, service fees and tax implications, and should consult a tax
adviser.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in each Fund's Prospectus entitled "How to
Buy Shares."
Valuation of Portfolio Securities. Substantially all of each Fund's
investments (excluding short-term investments) are valued each business
day by one or more independent pricing services (the "Service") approved
by the Board. Securities valued by the Service for which quoted bid
prices in the judgment of the Service are readily available and are
representative of the bid side of the market are valued at the mean
between the quoted bid prices (as obtained by the Service from dealers in
such securities) and asked prices (as calculated by the Service based upon
its evaluation of the market for such securities). Other investments
valued by the Service are carried at fair value as determined by the
Service, based on methods which include consideration of: yields or
prices of securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions.
Short-term investments are not valued by the Service and are valued at the
mean price or yield equivalent for such securities or for securities of
comparable maturity, quality and type as obtained from market makers.
Other investments that are not valued by the Service are valued at the
average of the most recent bid and asked prices in the market in which
such investments are primarily traded, or at the last sales price for
securities traded primarily on an exchange or the national securities
market. In the absence of reported sales of investments traded primarily
on an exchange or the national securities market, the average of the most
recent bid and asked prices is used. Bid price is used when no asked
price is available. Any assets or liabilities initially expressed in
terms of foreign currency will be translated into U.S. dollars at the
midpoint of the New York interbank market spot exchange rate as quoted on
the day of such translation by the Federal Reserve Bank of New York or, if
no such rate is quoted on such date, at the exchange rate previously
quoted by the Federal Reserve Bank of New York or at such other quoted
market exchange rate as may be determined to be appropriate by the
Manager. Expenses and fees, including the management fee (reduced by the
expense limitation, if any), are accrued daily and taken into account for
the purpose of determining the net asset value of a Fund's shares.
Restricted securities, as well as securities or other assets for
which recent market quotations are not readily available, or are not
valued by the Service, are valued at fair value as determined in good
faith by the Board. The Board will review the method of valuation on a
current basis. In making their good faith valuation of restricted
securities, the Board members generally will take the following factors
into consideration: restricted securities which are, or are convertible
into, securities of the same class of securities for which a public market
exists usually will be valued at market value less the same percentage
discount at which purchased. This discount will be revised periodically
by the Board if the Board members believe that it no longer reflects the
value of the restricted securities. Restricted securities not of the same
class as securities for which a public market exists usually will be
valued initially at cost. Any subsequent adjustment from cost will be
based upon considerations deemed relevant by the Board.
New York Stock Exchange Closings. The holidays (as observed) on
which the New York Stock Exchange is closed currently are: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in each Fund's Prospectus entitled
"Dividends, Distributions and Taxes."
Management of the Company believes that Dreyfus Short Term Income
Fund has qualified for the fiscal year ended July 31, 1995 as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended
(the "Code"). It is expected that Dreyfus Intermediate Term Income Fund
will qualify as a regulated investment company under the Code. Each Fund
intends to continue to so qualify if such qualification is in the best
interests of its shareholders. As a regulated investment company, each
Fund will pay no Federal income tax on net investment income and net
realized securities gains to the extent that such income and gains are
distributed to shareholders in accordance with applicable provisions of
the Code. The term "regulated investment company" does not imply the
supervision of management or investment practices or policies by any
government agency.
Any dividend or distribution paid shortly after an investor's
purchase may have the effect of reducing the net asset value of the shares
below the cost of the investment. Such a dividend or distribution would
be a return of investment in an economic sense, although taxable as stated
above. In addition, the Code provides that if a shareholder holds shares
of a Fund for six months or less and has received a capital gain
distribution with respect to such shares, any loss incurred on the sale of
such shares will be treated as long-term capital loss to the extent of the
capital gain distribution received.
Ordinarily, gains and losses realized from portfolio transactions
will be treated as capital gains and losses. However, a portion of the
gain or loss realized from the disposition of foreign currencies
(including foreign currency denominated bank deposits) and non-U.S. dollar
denominated securities (including debt instruments and certain forward
contracts and options) may be treated as ordinary income or loss under
Section 988 of the Code. In addition, all or a portion of any gains
realized from the sale or other disposition of certain market discount
bonds will be treated as ordinary income under Section 1276 of the Code.
Finally, all or a portion of the gain realized from engaging in
"conversion transactions" may be treated as ordinary income under Section
1258 of the Code. "Conversion transactions" are defined to include
certain forward, futures, option and straddle transactions, transactions
marketed or sold to produce capital gains, or transactions described in
Treasury regulations to be issued in the future.
Under Section 1256 of the Code, any gain or loss realized by a Fund
from certain forward contracts and options transactions will be treated as
60% long-term capital gain or loss and 40% short-term capital gain or
loss. Gain or loss will arise upon exercise or lapse of such contracts
and options as well as from closing transactions. In addition, any such
contracts or options remaining unexercised at the end of the Fund's
taxable year will be treated as sold for their then fair market value,
resulting in additional gain or loss to such Fund characterized in the
manner described above.
Offsetting positions held by a Fund involving certain foreign
currency forward contracts or options may constitute "straddles."
"Straddles" are defined to include "offsetting positions" in actively
traded personal property. The tax treatment of "straddles" is governed by
Sections 1092 and 1258 of the Code, which, in certain circumstances,
overrides or modifies the provisions of Sections 1256 and 988 of the Code.
As such, all or a portion of any short or long-term capital gain from
certain "straddle" transactions may be recharacterized to ordinary income.
If a Fund were treated as entering into "straddles" by reason of its
engaging in certain forward contracts or options transactions, such
"straddles" would be characterized as "mixed straddles" if the forward
contracts or options transactions comprising a part of such "straddles"
were governed by Section 1256 of the Code. A Fund may make one or more
elections with respect to "mixed straddles." Depending on which election
is made, if any, the results to the Fund may differ. If no election is
made, to the extent the "straddle" and conversion transaction rules apply
to positions established by the Fund, losses realized by the Fund will be
deferred to the extent of unrealized gain in the offsetting position.
Moreover, as a result of the "straddle" and conversion transaction rules,
short-term capital loss on "straddle" positions may be recharacterized as
long-term capital loss, and long-term capital gains may be treated as
short-term capital gains or ordinary income.
Investment by a Fund in securities issued or acquired at a discount,
or providing for deferred interest or for payment of interest in the form
of additional obligations could under special tax rules affect the amount,
timing and character of distributions to shareholders by causing the Fund
to recognize income prior to the receipt of cash payments. For example,
the Fund could be required to accrue a portion of the discount (or deemed
discount) at which the securities were issued each year and to distribute
such income in order to maintain its qualification as a regulated
investment company. In such case, the Fund may have to dispose of
securities which it might otherwise have continued to hold in order to
generate cash to satisfy these distribution requirements.
PORTFOLIO TRANSACTIONS
The Manager assumes general supervision over placing orders on behalf
of the Company for the purchase or sale of portfolio securities.
Allocation of brokerage transactions, including their frequency, is made
in the best judgment of the Manager and in a manner deemed fair and
reasonable to shareholders. The primary consideration is prompt execution
of orders at the most favorable net price. Subject to this consideration,
the brokers selected will include those that supplement the Manager's
research facilities with statistical data, investment information,
economic facts and opinions. Information so received is in addition to
and not in lieu of services required to be performed by the Manager and
the Manager's fees are not reduced as a consequence of the receipt of such
supplemental information. Such information may be useful to the Manager
in serving both the Company and other funds which it advises and,
conversely, supplemental information obtained by the placement of business
of other clients may be useful to the Manager in carrying out its
obligations to the Company.
Sales of Fund shares by a broker may be taken into consideration, and
brokers also will be selected because of their ability to handle special
executions such as are involved in large block trades or broad
distributions, provided the primary consideration is met. Large block
trades may, in certain cases, result from two or more funds advised or
administered by the Manager being engaged simultaneously in the purchase
or sale of the same security. Certain of the Funds' transactions in
securities of foreign issuers may not benefit from the negotiated
commission rates available to the Funds for transactions in securities of
domestic issuers. When transactions are executed in the over-the-counter
market, each Fund will deal with the primary market makers unless a more
favorable price or execution otherwise is obtainable. Foreign exchange
transactions are made with banks or institutions in the interbank market
at prices reflecting a mark-up or mark-down and/or commission.
Portfolio turnover may vary from year to year as well as within a
year. High turnover rates are likely to result in greater brokerage
expenses. The overall reasonableness of brokerage commissions paid is
evaluated by the Manager based upon its knowledge of available information
as to the general level of commissions paid by other institutional
investors for comparable services.
For the period August 18, 1992 (commencement of operations) through
July 31, 1993 and for the fiscal years ended July 31, 1994 and 1995, no
brokerage commissions were paid by Dreyfus Short Term Income Fund. Gross
spreads and concessions on principal transactions which were determinable
amounted to $72,750, $31,500 and $432,313 for the same periods, none of
which were paid to the Distributor.
The increase in the gross spreads and commissions on principal
transactions paid by Dreyfus Short Term Income Fund for the fiscal year
ended July 31, 1995 was caused by the Manager's response to the increase
in interest rates during the period. The Manager sought to sell certain
portfolio securities and then purchase these securities at a lower price.
As the spreads on the securities sold and repurchased widened, the Fund's
frequent sale and repurchase of the same security caused it to incur
greater gross spreads and commissions on principal transactions.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in each Fund's Prospectus entitled
"Performance Information."
Dreyfus Intermediate Term Income Fund had not commenced operations as
of the date hereof. Accordingly, no performance information is available
for such Fund.
Dreyfus Short Term Income Fund's current yield for the 30-day period
ended July 31, 1995 was 5.65%, which reflects the absorption of certain
expenses pursuant to expense limitations in effect. See "Management of
the Fund" in the Fund's Prospectus. Had certain expenses not been
absorbed, current yield for the same period would have been 5.51%.
Current yield is computed pursuant to a formula which operates as follows:
the amount of the Fund's expenses accrued for the 30-day period (net of
reimbursements) is subtracted from the amount of the dividends and
interest earned (computed in accordance with regulatory requirements) by
the Fund during the period. That result is then divided by the product
of: (a) the average daily number of shares outstanding during the period
that were entitled to receive dividends, and (b) the net asset value per
share on the last day of the period less any undistributed earned income
per share reasonably expected to be declared as a dividend shortly
thereafter. The quotient is then added to 1, and that sum is raised to
the 6th power, after which 1 is subtracted. The current yield is then
arrived at by multiplying the result by 2.
Dreyfus Short Term Income Fund's average annual return for the 1 and
2.953 year periods ended July 31, 1995 was 7.05% and 5.68%, respectively.
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased with a hypothetical $1,000
payment made at the beginning of the period (assuming the reinvestment of
dividends and distributions), dividing by the amount of the initial
investment, taking the "n"th root of the quotient (where "n" is the number
of years in the period) and subtracting 1 from the result.
Dreyfus Short Term Income Fund's total return for the period August
18, 1992 (commencement of operations) through July 31, 1995 was 17.72%.
Total return is calculated by subtracting the amount of the Fund's net
asset value per share at the beginning of a stated period from the net
asset value per share at the end of the period (after giving effect to the
reinvestment of dividends and distributions during the period), and
dividing the result by the net asset value per share at the beginning of
the period.
From time to time, the Company may compare a Fund's performance with
the performance of other instruments, such as certificates of deposit and
FDIC-insured bank money market accounts.
INFORMATION ABOUT THE FUNDS
The following information supplements and should be read in
conjunction with the section in each Fund's Prospectus entitled "General
Information."
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and
non-assessable. Fund shares are of one class and have equal rights as to
dividends and in liquidation. Shares have no preemptive, subscription or
conversion rights and are freely transferable.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted under the provisions of the 1940 Act or applicable state law or
otherwise to the holders of the outstanding voting securities of an
investment company, such as the Company, will not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each series affected by such matter. Rule 18f-2
further provides that a series shall be deemed to be affected by a matter
unless it is clear that the interests of each series in the matter are
identical or that the matter does not affect any interest of such series.
However, the Rule exempts the selection of independent accountants and the
election of Board members from the separate voting requirements of the
Rule.
Each Fund will send annual and semi-annual financial statements to
all its shareholders.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS
The Bank of New York, 90 Washington Street, New York, New York 10286,
is the Company's custodian. Dreyfus Transfer, Inc., a wholly-owned
subsidiary of the Manager is located at One American Express Plaza,
Providence, Rhode Island 02903 and serves as the Company's transfer and
dividend disbursing agent. Under a transfer agency agreement with the
Fund, the Transfer Agent arranges for the maintenance of shareholder
account records for the Fund, the handling of certain communications
between shareholders and the Fund and the payment of dividends and
distributions payable by the Fund. For these services, the Transfer Agent
receives a monthly fee computed on the basis of the number of shareholder
accounts during the month, and is reimbursed for certain out-of-pocket
expenses. Neither The Bank of New York nor Dreyfus Transfer, Inc. has any
part in determining the investment policies of either Fund or which
securities are to be purchased or sold by a Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York
10004-2696, as counsel for the Company, has rendered its opinion as to
certain legal matters regarding the due authorization and valid issuance
of the shares of Common Stock being sold pursuant to each Fund's
Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of the Company.
APPENDIX
Description of certain ratings assigned by S&P, Moody's, Fitch and
Duff:
S&P
Bond Ratings
AAA
Bonds rated AAA have the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA
Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A
Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher rated categories.
BBB
Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for bonds in
higher rated categories.
BB
Bonds rated BB have less near-term vulnerability to default than
other speculative grade debt. However, they face major ongoing
uncertainties or exposure to adverse business, financial or economic
conditions which could lead to inadequate capacity to meet timely interest
and principal payments.
B
Bonds rated B have a greater vulnerability to default but presently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial or economic conditions would likely impair
capacity or willingness to pay interest and repay principal.
CCC
Bonds rated CCC have a current identifiable vulnerability to default,
and is dependent upon favorable business, financial and economic
conditions to meet timely payments of interest and repayment of principal.
In the event of adverse business, financial or economic conditions, they
are not likely to have the capacity to pay interest and repay principal.
S&P's letter ratings may be modified by the addition of a plus (+) or
minus (-) sign designation, which is used to show relative standing within
the major rating categories, except in the AAA (Prime Grade) category.
Commercial Paper Rating
The designation A-1 by S&P indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those
issues determined to possess overwhelming safety characteristics are
denoted with a plus sign (+) designation.
Moody's
Bond Ratings
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally are
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
Baa
Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba
Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection
of interest and principal payments may be very moderate, and therefore not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to
principal or interest.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category
[and in the categories below B]. The modifier 1 indicates a ranking for
the security in the higher end of a rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates a ranking in
the lower end of a rating category.
Commercial Paper Rating
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity
for repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins
in earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a range of financial markets
and assured sources of alternate liquidity.
Fitch
Bond Ratings
The ratings represent Fitch's assessment of the issuer's ability to
meet the obligations of a specific debt issue or class of debt. The
ratings take into consideration special features of the issue, its
relationship to other obligations of the issuer, the current financial
condition and operative performance of the issuer and of any guarantor, as
well as the political and economic environment that might affect the
issuer's future financial strength and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability
to pay interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA
Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because
bonds rated in the AAA and AA categories are not significantly vulnerable
to foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
A
Bonds rated A are considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay principal
is considered to be strong, but may be more vulnerable to adverse changes
in economic conditions and circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have an adverse
impact on these bonds and, therefore, impair timely payment. The
likelihood that the ratings of these bonds will fall below investment
grade is higher than for bonds with higher ratings.
BB
Bonds rated BB are considered speculative. The obligor's ability to
pay interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can be
identified which could assist the obligor in satisfying its debt service
requirements.
B
Bonds rated B are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.
CCC
Bonds rated CCC have certain identifiable characteristics, which, if
not remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.
Plus (+) and minus (-) signs are used with a rating symbol to
indicate the relative position of a credit within the rating category.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of up to three years, including
commercial paper, certificates of deposit, medium-term notes, and
municipal and investment notes.
Although the credit analysis is similar to Fitch's bond rating
analysis, the short-term rating places greater emphasis than bond ratings
on the existence of liquidity necessary to meet the issuer's obligations
in a timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
F-1+.
Duff
Bond Ratings
AAA
Bonds rated AAA are considered highest credit quality. The risk
factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.
AA
Bonds rated AA are considered high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to
time because of economic conditions.
A
Bonds rated A have protection factors which are average but adequate.
However, risk factors are more variable and greater in periods of economic
stress.
BBB
Bonds rated BBB are considered to have below average protection
factors but still considered sufficient for prudent investment.
Considerable variability in risk during economic cycles.
BB
Bonds rated BB are below investment grade but are deemed by Duff as
likely to meet obligations when due. Present or prospective financial
protection factors fluctuate according to industry conditions or company
fortunes. Overall quality may move up or down frequently within the
category.
B
Bonds rated B are below investment grade and possess the risk that
obligations will not be met when due. Financial protection factors will
fluctuate widely according to economic cycles, industry conditions and/or
company fortunes. Potential exists for frequent changes in quality rating
within this category or into a higher or lower quality rating grade.
CCC
Bond rated CCC are well below investment grade securities. Such
bonds may be in default or have considerable uncertainty as to timely
payment of interest, preferred dividends and/or principal. Protection
factors are narrow and risk can be substantial with unfavorable economic
or industry conditions and/or with unfavorable company developments.
Plus (+) and minus (-) signs are used with a rating symbol (except
AAA) to indicate the relative position of a credit within the rating
category.
Commercial Paper Rating
The rating Duff-1 is the highest commercial paper rating assigned by
Duff. Paper rated Duff-1 is regarded as having very high certainty of
timely payment with excellent liquidity factors which are supported by
ample asset protection. Risk factors are minor.
<TABLE>
<CAPTION>
DREYFUS SHORT-TERM INCOME FUND, INC.
STATEMENT OF INVESTMENTS JULY 31, 1995
PRINCIPAL
BONDS AND NOTES-99.0% AMOUNT VALUE
------------------- ----------------
<S> <C> <C>
BANKING-3.7%............ Capital One Bank,
Notes, 8 1/8%, 2000......................... $ 5,000,000 $ 5,207,925
Chemical Banking,
Sub. Notes, 10 3/8%, 1999................... 2,300,000 2,564,068
--------------
7,771,993
--------------
BROKERAGE-1.4%.......... Bear Stearns Cos.,
Sr. Notes, 5 7/8%, 1996..................... 3,000,000 2,995,812
--------------
CONSUMER-9.6%........... Bass America,
Gtd. Notes, 6 3/4%, 1999.................... 1,000,000 1,006,224
Coca-Cola Enterprises,
Notes, 6 1/2%, 1997......................... 6,100,000 6,133,172
Federal Express,
Sr. Notes, 9 3/4%, 1996..................... 1,000,000 1,026,654
IBM,
Notes, 6 3/8%, 1997......................... 5,000,000 5,019,680
PepsiCo,
Notes, 7%, 1996............................. 5,000,000 5,052,015
Safeway,
Sr. Medium-Term Notes, Ser. B, 8.07%, 1997.. 2,000,000(a) 2,033,660
--------------
20,271,405
--------------
ENTERTAINMENT-4.9%...... Time Warner,
Notes, 7.95%, 2000.......................... 5,000,000 5,114,650
Walt Disney,
Notes, 8%, 1997............................. 5,000,000 5,250,000
--------------
10,364,650
--------------
FINANCE-21.7%........... Fleet Financial Group,
Sr. Notes, 7 1/8%, 2000..................... 5,000,000 5,081,720
GATX Capital,
Medium-Term Notes, Ser. C, 10%, 1996........ 5,000,000 5,071,340
General Electric Capital,
Medium-Term Notes, Ser. A, 7 1/2%, 1998..... 10,000,000 10,307,050
General Motors Acceptance,
Medium-Term Notes, 7.35%, 1997.............. 8,050,000 8,181,706
International Lease Finance,
Medium-Term Notes, Ser. E, 6.47%, 1997...... 4,000,000 4,016,456
SAFECO,
Notes, 10 3/4%, 1995......................... 3,500,000 3,518,438
USL Capital,
Sr. Notes, 8 1/8%, 2000...................... 5,000,000 5,264,655
U. S. Leasing International,
Sr. Notes, 8 3/4%, 2001..................... 3,800,000 4,149,091
--------------
45,590,456
--------------
DREYFUS SHORT-TERM INCOME FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) JULY 31, 1995
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
--------------- ----------------
INDUSTRIAL-25.0% Alco Capital Resource, Medium-Term Notes:
Ser. A, 8.04%, 1997......................... $ 5,000,000 $ 5,141,390
Ser. A, 6.99%, 2000......................... 3,000,000 3,023,475
Caterpillar Financial Services,
Medium-Term Notes, Ser. E, 8.16%, 1999...... 10,000,000 10,484,820
Deere & Co.,
Notes, 8 1/4%, 1996......................... 3,600,000 3,663,976
Ingersoll-Rand, Medium-Term Notes:
Ser. A, 6.24%, 1997......................... 5,000,000 5,002,150
Ser. A, 6.42%, 1998.......................... 9,000,000 9,000,900
John Deere Capital, Medium-Term Notes:
Ser. B, 7.37%, 2000......................... 5,000,000 5,144,400
Ser. B, 7.91%, 2000.......................... 5,750,000 6,032,906
PACCAR Financial,
Medium-Term Notes, Ser. F, 7.20%, 1999...... 5,000,000 5,105,695
--------------
52,599,712
--------------
INSURANCE-7.9% Associates Corp. of North America,
Medium-Term Sr. Notes:
Ser. G, 7.05%, 1997......................... 6,205,000 6,289,220
Ser. G, 7 5/8%, 2000........................ 5,350,000 5,543,354
SunAmerica,
Medium-Term Notes, 6.26%, 2001............. 5,000,000 4,844,800
--------------
16,677,374
--------------
TRANSPORTATION-4.9%..... FINOVA Capital,
Notes, 8%, 2000............................. 5,000,000 5,225,285
Ryder System,
Medium-Term Notes, Ser. 10, 7 3/4%, 1996.... 5,000,000 5,068,960
--------------
10,294,245
--------------
FOREIGN/
GOVERNMENTAL-6.6%.... Canada Government Bonds,
6 1/2%, 2000................................ 10,000,000 10,052,000
Ford Motor Credit,
Medium-Term Notes, 10 3/8%, 1996............ 3,656,307(b) 3,759,780
--------------
13,811,780
--------------
U.S. GOVERNMENT Federal Home Loan Banks, Consolidated Bonds:
AND AGENCIES-13.3%...... Ser. PL, 5.84%, 6/22/1998................... 9,000,000 8,926,875
5.77%, 6/29/1998............................ 5,000,000 4,951,565
U.S. Treasury Notes:
9 1/4%, 1/15/1996........................... 10,750,000 10,916,292
8 7/8%, 11/15/1997.......................... 2,500,000 2,653,907
9 1/8%, 5/15/1999........................... 500,000 550,000
--------------
27,998,639
--------------
TOTAL BONDS AND NOTES
(cost $206,791,144)......................... $208,376,066
==============
DREYFUS SHORT-TERM INCOME FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) JULY 31, 1995
PRINCIPAL
SHORT-TERM INVESTMENT-1.9% AMOUNT VALUE
---------------- ---------------
TIME DEPOSIT; Chemical Bank (London),
5 7/8%, 8/1/1995
(cost $4,062,000)............... $ 4,062,000 $ 4,062,000
==============
TOTAL INVESTMENTS (cost $210,853,144)........................................................... 100.9% $212,438,066
================ ==============
LIABILITIES, LESS CASH AND RECEIVABLES (.9%) $ (1,914,024)
================ ==============
NET ASSETS...................................................................................... 100.0% $210,524,042
================ ==============
NOTES TO STATEMENT OF INVESTMENTS:
(a) Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At
July 31, 1995, these securities amounted to $2,033,660 or 1.0% of net
assets.
(b) Denominated in Canadian Dollars.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS SHORT-TERM INCOME FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES JULY 31, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $210,853,144)-see statement..................................... $212,438,066
Cash.................................................................... 709,588
Interest receivable..................................................... 4,006,535
Receivable for subscriptions to Common Stock............................ 1,000
Prepaid expenses ....................................................... 43,383
---------------
217,198,572
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 98,841
Due to Distributor...................................................... 2,493
Payable for investment securities purchased............................. 5,000,000
Dividends Payable....................................................... 1,174,412
Payable for Common Stock redeemed....................................... 313,244
Accrued expenses........................................................ 85,540 6,674,530
--------------- ---------------
NET ASSETS.................................................................. $210,524,042
===============
REPRESENTED BY:
Paid-in capital......................................................... $225,544,579
Accumulated undistributed investment income-net......................... 110,728
Accumulated net realized (loss) on investments.......................... (16,716,187)
Accumulated net unrealized appreciation on investments-Note 3........... 1,584,922
---------------
NET ASSETS at value applicable to 17,710,612 shares outstanding
(500 million shares of $.001 par value Common Stock authorized)......... $210,524,042
===============
NET ASSET VALUE, offering and redemption price per share
($210,524,042 / 17,710,612 shares)...................................... $11.89
========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS SHORT-TERM INCOME FUND, INC.
STATEMENT OF OPERATIONS YEAR ENDED JULY 31, 1995
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 18,200,290
EXPENSES:
Management fee-Note 2(a).............................................. $ 1,156,674
Shareholder servicing costs-Note 2(b)................................. 784,942
Prospectus and shareholders' reports-Note 2(b)........................ 62,336
Registration fees..................................................... 49,701
Custodian fees........................................................ 49,504
Professional fees..................................................... 29,808
Directors' fees and expenses-Note 2(c)................................ 29,610
Miscellaneous......................................................... 24,075
--------------
2,186,650
Less-reduction in management fee due to
undertakings-Note 2(a)............................................ 785,529
--------------
TOTAL EXPENSES.................................................. 1,401,121
--------------
INVESTMENT INCOME-NET........................................... 16,799,169
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments-Note 3............................... $(11,193,340)
Net unrealized appreciation on investments.............................. 9,381,794
--------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (1,811,546)
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $14,987,623
==============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS SHORT-TERM INCOME FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED JULY 31,
---------------------------------
1994 1995
--------------- ---------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 19,445,054 $ 16,799,169
Net realized (loss) on investments...................................... (5,611,159) (11,193,340)
Net unrealized appreciation (depreciation) on investments for the year.. (8,144,668) 9,381,794
--------------- ---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 5,689,227 14,987,623
--------------- ---------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net................................................... (19,394,002) (16,781,257)
--------------- ---------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 340,428,554 79,943,038
Dividends reinvested.................................................... 16,377,882 12,577,109
Cost of shares redeemed................................................. (271,809,975) (157,230,575)
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS..... 84,996,461 (64,710,428)
--------------- ---------------
TOTAL INCREASE (DECREASE) IN NET ASSETS........................... 71,291,686 (66,504,062)
NET ASSETS:
Beginning of year....................................................... 205,736,418 277,028,104
--------------- ---------------
End of year (including undistributed investment income--net: $92,816 in 1994
and $110,728 in 1995).................................................... $ 277,028,104 $ 210,524,042
=============== ===============
SHARES SHARES
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 27,511,855 6,812,455
Shares issued for dividends reinvested.................................. 1,337,198 1,071,488
Shares redeemed......................................................... (22,144,923) (13,377,953)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING......................... 6,704,130 (5,494,010)
=============== ===============
See notes to financial statements.
</TABLE>
DREYFUS SHORT-TERM INCOME FUND, INC.
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Fund's Prospectus dated
December 1, 1995.
DREYFUS SHORT-TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a non-diversified open-end management investment company. Dreyfus Service
Corporation, until August 24, 1994, acted as the distributor of the Fund's
shares, which are sold to the public without a sales load. Dreyfus Service
Corporation is a wholly-owned subsidiary of The Dreyfus Corporation
("Manager"). Effective August 24, 1994, the Manager became a direct
subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of FDI Distribution Services, Inc., a provider of mutual fund
administration services, which in turn is a wholly-owned subsidiary of FDI
Holdings, Inc., the parent company of which is Boston Institutional Group,
Inc.
(A) PORTFOLIO VALUATION: The Fund's investments (excluding short-term
investments and U.S. Government obligations) are valued each business day by
an independent pricing service ("Service") approved by the Board of
Directors. Investments for which quoted bid prices are readily available and
are representative of the bid side of the market in the judgment of the
Service are valued at the mean between the quoted bid prices (as obtained by
the Service from dealers in such securities) and asked prices (as calculated
by the Service based upon its evaluation of the market for such securities).
Other investments (which constitute a majority of the portfolio securities)
are carried at fair value as determined by the Service, based on methods
which include consideration of: yields or prices of securities of comparable
quality, coupon, maturity and type; indications as to values from dealers;
and general market conditions. Investments in U.S. Government obligations are
valued at the mean between quoted bid and asked prices. Investments
denominated in foreign currencies are translated to U.S. dollars at the
prevailing rates of exchange.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, including, where applicable, amortization of discount on investments,
is recognized on the accrual basis.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Fund may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Fund not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of approximately $9,958,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to July 31, 1995. The
carryover does not include net realized securities losses from November 1,
1994 through
DREYFUS SHORT-TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
July 31, 1995 which are treated, for Federal income tax purposes, as arising
in fiscal 1996. If not applied, the carryover expires in fiscal 2003.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .50 of 1% of the average
daily value of the Fund's net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Fund's
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Fund. The most stringent state expense limitation
applicable to the Fund presently requires reimbursement of expenses in any
full fiscal year that such expenses (exclusive of distribution expenses and
certain expenses as described above) exceed 2 1/2% of the first $30 million,
2% of the next $70 million and 1 1/2% of the excess over $100 million of the
average value of the Fund's net assets in accordance with California
"blue-sky" regulations. However, the Manager had undertaken from August 1,
1994 through July 13, 1995, to reduce the management fee paid by the Fund, to
the extent of the Fund's aggregate expenses (exclusive of certain expenses as
described above) exceeded specified annual percentages of the Fund's average
daily net assets. The Manager has currently undertaken from July 14, 1995
through September 30, 1995, or until such time as the net assets of the Fund
exceed $350 million, regardless of whether they remain at that level, to
reduce the management fee paid by, or reimburse such excess expenses of the
Fund, to the extent that the Fund's aggregate annual expenses (excluding
certain expenses as described above) exceed an annual rate of .80 of 1% of
the average daily value of the Fund's net assets. The reduction in management
fee, pursuant to the undertakings, amounted to $682,003 for the year ended
July 31, 1995.
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(B) On August 4, 1994, Fund shareholders approved a revised Service Plan
(the "Plan") pursuant to Rule 12b-1 under the Act. Pursuant to the Plan,
effective August 24, 1994, the Fund (a) reimburses the Distributor for
payments to certain Service Agents for distributing the Fund's shares and
servicing shareholder accounts and (b) pays the Manager, Dreyfus Service
Corporation or any affiliate (collectively "Dreyfus") for advertising and
marketing relating to the Fund and servicing shareholders accounts, at an
aggregate annual rate of .20 of 1% of the value of the Fund's average daily
net assets. Each of the Distributor and Dreyfus may pay Service Agents (a
securities dealer, financial institution or other industry professional) a
fee in respect of the Fund's shares owned by shareholders with whom the
Service Agent has a servicing relationship or for whom the Service Agent is
the dealer or holder of record. Each of the Distributor and Dreyfus
determines the amounts to be paid to Service Agents to which it will make
payments and the basis on which such payments are made. The Plan also
separately provides for the Fund to bear the costs of preparing, printing and
distributing certain of the Fund's prospectuses and statements of additional
information and costs associated with implementing and operating the Plan,
not to exceed the greater of $100,000 or .005 of 1% of the Fund's average
daily net assets for any full fiscal year.
Prior to August 24, 1994, the Fund's Service Plan ("prior Service Plan")
provided that the Fund pay Dreyfus Service Corporation at an annual rate of
.20 of 1% of the value of the Fund's average daily net
DREYFUS SHORT-TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
assets, for costs and expenses in connection with advertising, marketing and
distributing the Fund's shares and for servicing shareholder accounts.
Dreyfus Service Corporation made payments to one or more Service Agents based
on the value of the Fund's shares owned by clients of the Service Agent. The
prior Service Plan also separately provided for the Fund to bear the cost of
preparing, printing and distributing certain of the Fund's prospectuses and
statements of additional information and costs associated with implementing
and operating the Plan, not to exceed the greater of $100,000 or .005 of 1%
of the Fund's average daily net assets for any full fiscal year.
During the year ended July 31, 1995, $474,522 was chargeable to the Fund
pursuant to the Plan, of which $103,526 was waived by the Fund, and $43,686
was charged pursuant to the prior Service Plan.
(C) Prior to August 24, 1994, certain officers and directors of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each director who is not an "affiliated person"
receives an annual fee of $2,500 and an attendance fee of $625 per meeting.
The Chairman of the Board receives an additional 25% of such compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of securities, other than
short-term securities, during the year ended July 31, 1995 amounted to
$1,104,174,462 and $1,172,464,010, respectively.
At July 31, 1995, accumulated net unrealized appreciation on investments
was $1,584,922 consisting of $2,853,893 gross unrealized appreciation and
$1,268,971 gross unrealized depreciation.
At July 31, 1995, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see
the Statement of Investments).
DREYFUS SHORT-TERM INCOME FUND, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS SHORT-TERM INCOME FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Dreyfus Short-Term Income Fund, Inc., including the statement of investments,
as of July 31, 1995, and the related statement of operations for the year
then ended, the statement of changes in net assets for each of the two years
in the period then ended, and financial highlights for each of the years
indicated therein. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation
of securities owned as of July 31, 1995 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Short-Term Income Fund, Inc. at July 31, 1995, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the indicated years, in conformity with generally
accepted accounting principles.
Ernst & Young LLP (signature logo)
New York, New York
August 30, 1995
Dreyfus Investment Grade Bond Funds, Inc.
PART C. OTHER INFORMATION
_________________________
Item 24. Financial Statements and Exhibits. - List
_______ _________________________________________
(a) Financial Statements:
Included in Part A of the Registration Statement
Condensed Financial Information for the period from August
18, 1992 (commencement of operations) to July 31, 1993 and
for each of the 2 years in the period ended July 31, 1995.
Included in Part B of the Registration Statement:
Statement of Investments-- July 31, 1995
Statement of Assets and Liabilities-- July 31, 1995
Statement of Operations--year ended July 31, 1995
Statement of Changes in Net Assets--for each of the
years ended July 31, 1994 and July 31, 1995
Notes to Financial Statements
Report of Ernst & Young LLP, Independent Auditors, dated
August 30, 1995
All Schedules and other financial statement information, for which provision
is made in the applicable accounting regulations of the Securities and
Exchange Commission, are either omitted because they are not required under
the related instructions, they are inapplicable, or the required information
is presented in the financial statements or notes thereto which are included
in Part B of the Registration Statement.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
(b) Exhibits:
(1) Registrant's Articles of Incorporation.
(2) Registrant's By-Laws.
(4) Specimen certificate for the Registrant's securities is
incorporated by reference to Exhibit (4) of the Registration
Statement on Form N-1A, filed on June 29, 1992.
(5) Management Agreement.
(6)(a) Distribution Agreement.
(6)(b) Forms of Service Agreement are incorporated by reference to
Exhibit 6(b) and (6)(c) of Post-Effective Amendment Nos. 5 to the
Registration Statement on Form N-1A, filed on September 28, 1994.
(8)(a) Custody Agreement.
(8)(b) Sub-Custodian Agreements are incorporated by reference to Exhibit
8(b) of Post-Effective Amendment No. 1 to the Registration
Statement on Form N-1A, filed on January 9, 1993.
(10) Opinion and consent of Registrant's counsel.
(11) Consent of Independent Auditors.
(15) Shareholder Services Plan.
(16) Schedules of Computation of Performance Data are incorporated by
reference to Exhibit (16) of Post-Effective Amendment No. 3 to
the Registration Statement on form N-1A filed on October 19, 1993.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
Other Exhibits
______________
(a) Powers of Attorney of the Directors and officers are
incorporated by reference to Other Exhibits (a) of Post-
Effective Amendment No. 5 to the Registration Statement
on Form N-1A, filed on September 28, 1994.
(b) Certificate of Secretary is incorporated by reference to
Other Exhibits (b) of Post-Effective Amendment No. 5 to
the Registration Statement on Form N-1A, filed on
September 28, 1994.
Item 25. Persons Controlled by or under Common Control with Registrant.
_______ ______________________________________________________________
Not Applicable
Item 26. Number of Holders of Securities.
_______ ________________________________
(1) (2)
Number of Record
Title of Class Holders as of November 2, 1995
______________ _____________________________
Common Stock
(Par value $.01) 11,376
Item 27. Indemnification
_______ _______________
The Statement as to the general effect of any contract,
arrangements or statute under which a director, officer,
underwriter or affiliated person of the Registrant is insured or
indemnified in any manner against any liability which may be
incurred in such capacity, other than insurance provided by any
director, officer, affiliated person or underwriter for their own
protection, is incorporated by reference to Item 4 of Part II of
Pre-Effective Amendment No. 1 to the Registration Statement on Form
N-1A, filed on August 11, 1992.
Reference is also made to the Distribution Agreement attached as
Exhibit (6) of Pre-Effective Amendment No. 5 to the Registration
Statement on Form N-1A, filed on September 28, 1995.
Item 28. Business and Other Connections of Investment Adviser.
_______ ____________________________________________________
The Dreyfus Corporation ("Dreyfus") and subsidiary companies
comprise a financial service organization whose business
consists primarily of providing investment management services
as the investment adviser, manager and distributor for sponsored
investment companies registered under the Investment Company Act
of 1940 and as an investment adviser to institutional and
individual accounts. Dreyfus also serves as sub-investment
adviser to and/or administrator of other investment companies.
Dreyfus Service Corporation is a wholly-owned subsidiary of
Dreyfus. Dreyfus Management, Inc., another wholly-owned
subsidiary, provides investment management services to various
pension plans, institutions and individuals.
Item 28. Business and Other Connections of Investment Adviser (continued)
________ ________________________________________________________________
Officers and Directors of Investment Adviser
____________________________________________
Name and Position
with Dreyfus Other Businesses
_________________ ________________
MANDELL L. BERMAN Real estate consultant and private investor
Director 29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034;
Past Chairman of the Board of Trustees of
Skillman Foundation.
Member of The Board of Vintners Intl.
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation****
Mellon Bank, N.A.****
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
ALVIN E. FRIEDMAN Senior Adviser to Dillon, Read & Co. Inc.
Director 535 Madison Avenue
New York, New York 10022;
Director and member of the Executive
Committee of Avnet, Inc.**
LAWRENCE M. GREENE Director:
Director Dreyfus America Fund
JULIAN M. SMERLING None
Director
DAVID B. TRUMAN Educational consultant;
Director Past President of the Russell Sage Foundation
230 Park Avenue
New York, New York 10017;
Past President of Mount Holyoke College
South Hadley, Massachusetts 01075;
DAVID B. TRUMAN Former Director:
(cont'd) Student Loan Marketing Association
1055 Thomas Jefferson Street, N.W.
Washington, D.C. 20006;
Former Trustee:
College Retirement Equities Fund
730 Third Avenue
New York, New York 10017
HOWARD STEIN Chairman of the Board:
Chairman of the Board and Dreyfus Acquisition Corporation*;
Chief Executive Officer The Dreyfus Consumer Credit Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
Director:
Avnet, Inc.**;
Dreyfus America Fund++++;
The Dreyfus Fund International
Limited+++++;
World Balanced Fund+++;
Dreyfus Partnership Management,
Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Organization, Inc.***;
Seven Six Seven Agency, Inc.*;
Trustee:
Corporate Property Investors
New York, New York
W. KEITH SMITH Chairman and Chief Executive Officer:
Vice Chairman of the Board The Boston Company*****
Vice Chairman of the Board:
Mellon Bank Corporation****
Mellon Bank, N.A.****
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
CHRISTOPHER M. CONDRON Vice Chairman:
President and Chief Mellon Bank Corporation****
Operating Officer The Boston Company*****
Deputy Director:
Mellon Trust****
Chief Executive Officer:
The Boston Company Asset Management,
Inc.*****
President:
Boston Safe Deposit and Trust Company*****
STEPHEN E. CANTER Former Chairman and Chief Executive Officer:
Vice Chairman and Kleinwort Benson Investment Management
Chief Investment Officer, Americas Inc.*
and a Director Director:
The Dreyfus Trust Company++
LAWRENCE S. KASH Chairman, President and Chief
Vice Chairman-Distribution Executive Officer:
and a Director The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
Executive Vice President and Director:
Dreyfus Service Organization, Inc.***;
Director:
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company++;
Dreyfus Service Corporation*;
President:
The Boston Company*****
Laurel Capital Advisors****
Boston Group Holdings, Inc.
Executive Vice President:
Mellon Bank, N.A.****
Boston Safe Deposit & Trust*****
PHILIP L. TOIA Chairman of the Board and Trust Investment
Vice Chairman-Operations Officer:
and Administration The Dreyfus Trust Company++;
and a Director Chairman of the Board and Chief Operating
Officer:
Major Trading Corporation*;
Director:
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Corporation*;
Seven Six Seven Agency, Inc.*;
President and Director:
Dreyfus Acquisition Corporation*;
The Dreyfus Consumer Credit Corporation*;
Dreyfus-Lincoln, Inc.*;
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Partnership Management, Inc.+;
Dreyfus Service Organization, Inc.***;
The Truepenny Corporation*;
Formerly, Senior Vice President:
The Chase Manhattan Bank, N.A. and
The Chase Manhattan Capital Markets
Corporation
One Chase Manhattan Plaza
New York, New York 10081
BARBARA E. CASEY President:
Vice President- Dreyfus Retirement Services Division;
Dreyfus Retirement Executive Vice President:
Services Boston Safe Deposit & Trust Co.*****
Dreyfus Service Corporation*
DIANE M. COFFEY None
Vice President-
Corporate Communications
ELIE M. GENADRY President:
Vice President- Institutional Services Division of Dreyfus
Institutional Sales Service Corporation*;
Broker-Dealer Division of Dreyfus Service
Corporation*;
Group Retirement Plans Division of Dreyfus
Service Corporation;
Executive Vice President:
Dreyfus Service Corporation*;
Dreyfus Service Organization, Inc.***;
Vice President:
The Dreyfus Trust Company++
HENRY D. GOTTMANN Executive Vice President:
Vice President-Retail Dreyfus Service Corporation*;
Sales and Service Vice President:
Dreyfus Precious Metals, Inc.*
DANIEL C. MACLEAN Director, Vice President and Secretary:
Vice President and General Dreyfus Precious Metals, Inc.*;
Counsel Director and Vice President:
The Dreyfus Consumer Credit Corporation*;
Director and Secretary:
Dreyfus Acquisition Corporation*;
Dreyfus Partnership Management, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation+;
Director, Vice President and Treasurer:
Lion Management, Inc.*;
Director:
The Dreyfus Trust Company++;
Secretary:
Dreyfus Service Corporation*;
Dreyfus Service Organization, Inc.***;
Seven Six Seven Agency, Inc.*
JEFFREY N. NACHMAN None
Vice President-Mutual Fund
Accounting
WILLIAM F. GLAVIN, JR. Executive Vice President:
Vice President-Corporate Dreyfus Service Corporation*;
Development Senior Vice President:
The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
KATHERINE C. WICKHAM Formerly, Assistant Commissioner:
Vice President- Department of Parks and Recreation of the
Human Resources City of New York
830 Fifth Avenue
New York, New York 10022
MARK N. JACOBS Vice President, Secretary and Director:
Vice President- Lion Management, Inc.*;
Legal and Secretary Secretary:
The Dreyfus Consumer Credit Corporation*;
Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.***;
Major Trading Corporation*;
The Truepenny Corporation*
ANDREW S. WASSER Vice President:
Vice President-Information Mellon Bank Corporation
Services One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
MAURICE BENDRIHEM Treasurer:
Controller Dreyfus Partnership Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Organization, Inc.***;
Seven Six Seven Agency, Inc.*;
The Truepenny Corporation*;
Controller:
Dreyfus Acquisition Corporation*;
Dreyfus Service Corporation*;
The Dreyfus Trust Company++;
The Dreyfus Consumer Credit Corporation*;
Formerly, Vice President-Financial Planning,
Administration and Tax:
Showtime/The Movie Channel, Inc.
1633 Broadway
New York, New York 10019
ELVIRA OSLAPAS Assistant Secretary:
Assistant Secretary Dreyfus Service Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Acquisition Corporation, Inc.*;
The Truepenny Corporation+
______________________________________
* The address of the business so indicated is 200 Park Avenue, New
York, New York 10166.
** The address of the business so indicated is 80 Cutter Mill Road,
Great Neck, New York 11021.
*** The address of the business so indicated is 131 Second Street, Lewes,
Delaware 19958.
**** The address of the business so indicated is One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258.
***** The address of the business so indicated is One Boston Place, Boston,
Massachusetts 02108.
+ The address of the business so indicated is Atrium Building, 80 Route
4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
+++ The address of the business so indicated is One Rockefeller Plaza,
New York, New York 10020.
++++ The address of the business so indicated is 2 Boulevard Royal,
Luxembourg.
+++++ The address of the business so indicated is Nassau, Bahama Islands.
Item 29. Principal Underwriters
________ ______________________
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
exclusive distributor:
1) Comstock Partners Strategy Fund, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC Money Market Fund, Inc.
7) Dreyfus BASIC Municipal Fund, Inc.
8) Dreyfus BASIC U.S. Government Money Market Fund
9) Dreyfus California Intermediate Municipal Bond Fund
10) Dreyfus California Tax Exempt Bond Fund, Inc.
11) Dreyfus California Tax Exempt Money Market Fund
12) Dreyfus Capital Value Fund, Inc.
13) Dreyfus Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) Dreyfus Edison Electric Index Fund, Inc.
18) Dreyfus Florida Intermediate Municipal Bond Fund
19) Dreyfus Florida Municipal Money Market Fund
20) Dreyfus Growth and Value Funds, Inc.
21) The Dreyfus Fund Incorporated
22) Dreyfus Global Bond Fund, Inc.
23) Dreyfus Global Growth, L.P. (A Strategic Fund)
24) Dreyfus GNMA Fund, Inc.
25) Dreyfus Government Cash Management
26) Dreyfus Growth and Income Fund, Inc.
27) Dreyfus Growth Opportunity Fund, Inc.
28) Dreyfus Institutional Money Market Fund
29) Dreyfus Institutional Short Term Treasury Fund
30) Dreyfus Insured Municipal Bond Fund, Inc.
31) Dreyfus Intermediate Municipal Bond Fund, Inc.
32) Dreyfus International Equity Fund, Inc.
33) Dreyfus Investors GNMA Fund
34) The Dreyfus/Laurel Funds, Inc.
35) The Dreyfus/Laurel Funds Trust
36) The Dreyfus/Laurel Tax-Free Municipal Funds
37) The Dreyfus/Laurel Investment Series
38) Dreyfus Life and Annuity Index Fund, Inc.
39) Dreyfus LifeTime Portfolios, Inc.
40) Dreyfus Liquid Assets, Inc.
41) Dreyfus Massachusetts Intermediate Municipal Bond Fund
42) Dreyfus Massachusetts Municipal Money Market Fund
43) Dreyfus Massachusetts Tax Exempt Bond Fund
44) Dreyfus Michigan Municipal Money Market Fund, Inc.
45) Dreyfus Money Market Instruments, Inc.
46) Dreyfus Municipal Bond Fund, Inc.
47) Dreyfus Municipal Cash Management Plus
48) Dreyfus Municipal Money Market Fund, Inc.
49) Dreyfus New Jersey Intermediate Municipal Bond Fund
50) Dreyfus New Jersey Municipal Bond Fund, Inc.
51) Dreyfus New Jersey Municipal Money Market Fund, Inc.
52) Dreyfus New Leaders Fund, Inc.
53) Dreyfus New York Insured Tax Exempt Bond Fund
54) Dreyfus New York Municipal Cash Management
55) Dreyfus New York Tax Exempt Bond Fund, Inc.
56) Dreyfus New York Tax Exempt Intermediate Bond Fund
57) Dreyfus New York Tax Exempt Money Market Fund
58) Dreyfus Ohio Municipal Money Market Fund, Inc.
59) Dreyfus 100% U.S. Treasury Intermediate Term Fund
60) Dreyfus 100% U.S. Treasury Long Term Fund
61) Dreyfus 100% U.S. Treasury Money Market Fund
62) Dreyfus 100% U.S. Treasury Short Term Fund
63) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
64) Dreyfus Pennsylvania Municipal Money Market Fund
65) Dreyfus Short-Intermediate Government Fund
66) Dreyfus Short-Intermediate Municipal Bond Fund
67) Dreyfus Short-Term Income Fund, Inc.
68) The Dreyfus Socially Responsible Growth Fund, Inc.
69) Dreyfus Strategic Growth, L.P.
70) Dreyfus Strategic Income
71) Dreyfus Strategic Investing
72) Dreyfus Tax Exempt Cash Management
73) The Dreyfus Third Century Fund, Inc.
74) Dreyfus Treasury Cash Management
75) Dreyfus Treasury Prime Cash Management
76) Dreyfus Variable Investment Fund
77) Dreyfus-Wilshire Target Funds, Inc.
78) Dreyfus Worldwide Dollar Money Market Fund, Inc.
79) General California Municipal Bond Fund, Inc.
80) General California Municipal Money Market Fund
81) General Government Securities Money Market Fund, Inc.
82) General Money Market Fund, Inc.
83) General Municipal Bond Fund, Inc.
84) General Municipal Money Market Fund, Inc.
85) General New York Municipal Bond Fund, Inc.
86) General New York Municipal Money Market Fund
87) Pacifica Funds Trust -
Pacifica Prime Money Market Fund
Pacifica Treasury Money Market Fund
88) Peoples Index Fund, Inc.
89) Peoples S&P MidCap Index Fund, Inc.
90) Premier Insured Municipal Bond Fund
91) Premier California Municipal Bond Fund
92) Premier Capital Growth Fund, Inc.
93) Premier Global Investing, Inc.
94) Premier GNMA Fund
95) Premier Growth Fund, Inc.
96) Premier Municipal Bond Fund
97) Premier New York Municipal Bond Fund
98) Premier State Municipal Bond Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly+ Director, President, Chief President and
Operating Officer and Compliance Treasurer
Officer
Joseph F. Tower, III+ Senior Vice President, Treasurer Assistant
and Chief Financial Officer Treasurer
John E. Pelletier+ Senior Vice President, General Vice President
Counsel, Secretary and Clerk and Secretary
Frederick C. Dey++ Senior Vice President Vice President
and Assistant
Treasurer
Eric B. Fischman++ Vice President and Associate Vice President
General Counsel and Assistant
Secretary
Lynn H. Johnson+ Vice President None
Paul Prescott+ Assistant Vice President None
Leslie M. Gaynor+ Assistant Treasurer None
Mary Nelson+ Assistant Treasurer None
John J. Pyburn++ Assistant Treasurer Assistant
Treasurer
Jean M. O'Leary+ Assistant Secretary and None
Assistant Clerk
John W. Gomez+ Director None
William J. Nutt+ Director None
________________________________
+ Principal business address is One Exchange Place, Boston, Massachusetts
02109.
++ Principal business address is 200 Park Avenue, New York, New York 10166.
Item 30. Location of Accounts and Records
________________________________
1. First Data Investor Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. Dreyfus Transfer, Inc.
a subsidiary of The Dreyfus Corporation
One American Express Plaza
Providence, Rhode Island 02903
3. The Bank of New York
90 Washington Street
New York, New York 10286
4. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 31. Management Services
_______ ___________________
Not Applicable
Item 32. Undertakings
________ ____________
(1) To file a Post-Effective Amendment, using financial statements
which need not be certified, within four to six months from the
effective date of Registrant's 1933 Act Registration Statement.
(2) To call a meeting of shareholders for the purpose of voting upon
the question of removal of a director or directors when
requested in writing to do so by the holders of at least 10% of
the Registrant's outstanding shares of common stock and in
connection with such meeting to comply with the provisions of
Section 16(c) of the Investment Company Act of 1940 relating to
shareholder communications.
(3) To furnish each person to whom a prospectus is delivered with a
copy of the Fund's latest Annual Report to Shareholders, upon
request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New
York, and State of New York on the 28th day of November, 1995.
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
BY: /s/ Marie E. Connolly*
-----------------------------------------
Marie E. Connolly, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933. This
Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signatures Title Date
__________________________ _______________________________ ________
/s/Marie E. Connolly* President (Principal Executive 11/28/95
- ------------------------------ Officer and Principal Accounting
Marie E. Connolly Officer) and Treasurer
/s/Joseph F. Tower III* Assistant Treasurer (Principal 11/28/95
- ------------------------------ Financial Officer)
Joseph F. Tower III
/s/Joseph S. DiMartino* Chairman of the Board 11/28/95
- ------------------------------
Joseph S. DiMartino
/s/Lucy Wilson Benson* Director 11/28/95
- ------------------------------
Lucy Wilson Benson
/s/David W. Burke* Director 11/28/95
- ------------------------------
David W. Burke
/s/Martin D. Fife* Director 11/28/95
- ------------------------------
Martin D. Fife
/s/Whitney I. Gerard* Director 11/28/95
- ------------------------------
Whitney I Gerard
/s/Robert R. Glauber* Director 11/28/95
- ------------------------------
Robert R. Glauber
/s/Arthur A. Hartman* Director 11/28/95
- ------------------------------
Arthur A. Hartman
/s/George L. Perry* Director 11/28/95
- ------------------------------
George L. Perry
/s/Paul D. Wolfowitz* Director 11/28/95
- ------------------------------
Paul Wolfowitz
*BY: Eric B. Fischman
-----------------------
Eric B. Fischman,
Attorney-in-Fact
EXHIBIT INDEX
Page
Articles of Incorporation
Registrant's By-Laws
Custody Agreement
Shareholder Services Plan
Distribution Plan
Opinion of Registrant's Counsel
Consent of Independent Auditors
ARTICLES OF INCORPORATION
OF
DREYFUS SHORT-TERM INCOME FUND, INC.
FIRST: The undersigned, David Stephens, whose address
is Seven Hanover Square, New York, New York 10004-2594, being at
least eighteen years of age, hereby forms a corporation under the
Maryland General Corporation Law.
SECOND: The name of the corporation (hereinafter called
the "corporation") is Dreyfus Short-Term Income Fund, Inc.
THIRD: The corporation is formed for the following
purpose or purposes:
(a) to conduct, operate and carry on the
business of an investment company;
(b) to subscribe for, invest in, reinvest
in, purchase or otherwise acquire, hold, pledge, sell,
assign, transfer, lend, write options on, exchange,
distribute or otherwise dispose of and deal in and with
securities of every nature, kind, character, type and
form, including without limitation of the generality of
the foregoing, all types of stocks, shares, futures
contracts, bonds, debentures, notes, bills and other
negotiable or non-negotiable instruments, obligations,
evidences of interest, certificates of interest,
certificates of participation, certificates, interests,
evidences of ownership, guarantees, warrants, options or
evidences of indebtedness issued or created by or
guaranteed as to principal and interest by any state or
local government or any agency or instrumentality
thereof, by the United States Government or any agency,
instrumentality, territory, district or possession
thereof, by any foreign government or any agency,
instrumentality, territory, district or possession
thereof, by any corporation organized under the laws of
any state, the United States or any territory or
possession thereof or under the laws of any foreign
country, bank certificates of deposit, bank time
deposits, bankers' acceptances and commercial paper; to
pay for the same in cash or by the issue of stock,
including treasury stock, bonds or notes of the
corporation or otherwise; and to exercise any and all
rights, powers and privileges of ownership or interest
in respect of any and all such investments of every kind
and description, including without limitation, the right
to consent and otherwise act with respect thereto, with
power to designate one or more persons, firms,
associations or corporations to exercise any of said
rights, powers and privileges in respect of any said
instruments;
(c) to borrow money or otherwise obtain credit
and to secure the same by mortgaging, pledging or
otherwise subjecting as security the assets of the
corporation;
(d) to issue, sell, repurchase, redeem,
retire, cancel, acquire, hold, resell, reissue, dispose
of, transfer, and otherwise deal in, shares of stock of
the corporation, including shares of stock of the
corporation in fractional denominations, and to apply to
any such repurchase, redemption, retirement,
cancellation or acquisition of shares of stock of the
corporation any funds or property of the corporation
whether capital or surplus or otherwise, to the full
extent now or hereafter permitted by the laws of the
State of Maryland;
(e) to conduct its business, promote its
purposes and carry on its operations in any and all of
its branches and maintain offices both within and
without the State of Maryland, in any States of the
United States of America, in the District of Columbia
and in any other parts of the world; and
(f) to do all and everything necessary,
suitable, convenient, or proper for the conduct,
promotion and attainment of any of the businesses and
purposes herein specified or which at any time may be
incidental thereto or may appear conducive to or
expedient for the accomplishment of any of such
businesses and purposes and which might be engaged in or
carried on by a corporation incorporated or organized
under the Maryland General Corporation Law, and to have
and exercise all of the powers conferred by the laws of
the State of Maryland upon corporations incorporated or
organized under the Maryland General Corporation Law.
The foregoing provisions of this Article THIRD shall be
construed both as purposes and powers and each as an independent
purpose and power. The foregoing enumeration of specific purposes
and powers shall not be held to limit or restrict in any manner
the purposes and powers of the corporation, and the purposes and
powers herein specified shall, except when otherwise provided in
this Article THIRD, be in no wise limited or restricted by
reference to, or inference from, the terms of any provision of
this or any other Article of these Articles of Incorporation;
provided, that the corporation shall not conduct any business,
promote any purpose, or exercise any power or privilege within or
without the State of Maryland which, under the laws thereof, the
corporation may not lawfully conduct, promote, or exercise.
FOURTH: The post office address of the principal office
of the corporation within the State of Maryland, and of the
resident agent of the corporation within the State of Maryland, is
The Corporation Trust Incorporated, 32 South Street, Baltimore,
Maryland 21202.
FIFTH: (1) The total number of shares of stock which
the corporation has authority to issue is five hundred million
(500,000,000) shares of Common Stock, all of which are of a par
value of one tenth of one cent ($.001) each.
(2) The aggregate par value of all the authorized
shares of stock is five hundred thousand dollars ($500,000.00).
(3) The Board of Directors of the corporation is
authorized, from time to time, to fix the price or the minimum
price or the consideration or minimum consideration for, and to
issue, the shares of stock of the corporation.
(4) The Board of Directors of the corporation is
authorized, from time to time, to classify or to reclassify, as
the case may be, any unissued shares of stock of the corporation.
(5) Subject to the power of the Board of Directors to
reclassify unissued shares, the shares of each class of stock of
the corporation shall have the following preferences, conversion
and other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption:
(i) All consideration received by the
corporation for the issuance or sale of shares together
with all income, earnings, profits and proceeds thereof,
shall irrevocably belong to such class for all purposes,
subject only to the rights of creditors, and are herein
referred to as "assets belonging to" such class. The
assets belonging to a class may be invested with the
assets belonging to one or more other classes in a
common investment portfolio. If the assets belonging to
more than one class are invested in a common investment
portfolio, the income and expenses of the investment
portfolio shall be allocated among the classes in
accordance with the number of shares outstanding of each
class or as otherwise determined by the Board of
Directors.
(ii) The assets belonging to such class shall
be charged with the liabilities of the corporation in
respect of such class and with such class' share of the
general liabilities of the corporation, in the latter
case in proportion that the net asset value of such
class bears to the net asset value of all classes. The
determination of the Board of Directors shall be
conclusive as to the allocation of liabilities,
including accrued expenses and reserves, to a class.
(iii) Dividends or distributions on shares of
each class, whether payable in stock or cash, shall be
paid only out of earnings, surplus or other assets
belonging to such class.
(iv) In the event of the liquidation or
dissolution of the corporation, stockholders of each
class shall be entitled to receive, as a class, out of
the assets of the corporation available for distribution
to stockholders, the assets belonging to such class and
the assets so distributable to the stockholders of such
class shall be distributed among such stockholders in
proportion to the number of shares of such class held by
them.
(v) On each matter submitted to a vote of the
stockholders, each holder of a share of stock shall be
entitled to one vote for each share standing in his name
on the books of the corporation irrespective of the
class thereof. All holders of shares of stock shall
vote as a single class except with respect to any matter
which affects only one or more classes of stock, in
which case only the holders of shares of the class or
classes affected shall be entitled to vote.
Except as provided above, all provisions of the Articles of
Incorporation relating to stock of the corporation shall apply to
shares of, and to the holders of, all classes of stock.
(6) Notwithstanding any provisions of the Maryland Gen-
eral Corporation Law requiring a greater proportion than a
majority of the votes of stockholders entitled to be cast in order
to take or authorize any action, any such action may be taken or
authorized upon the concurrence of a majority of the aggregate
number of votes entitled to be cast thereon.
(7) The presence in person or by proxy of the holders
of one-third of the shares of stock of the corporation entitled to
vote (without regard to class) shall constitute a quorum at any
meeting of the stockholders, except with respect to any matter
which, under applicable statutes or regulatory requirements,
requires approval by a separate vote of one or more classes of
stock, in which case the presence in person or by proxy of the
holders of one-third of the shares of stock of each class required
to vote as a class on the matter shall constitute a quorum.
(8) The corporation may issue shares of stock in
fractional denominations to the same extent as its whole shares,
and shares in fractional denominations shall be shares of stock
having proportionately to the respective fractions represented
thereby all the rights of whole shares, including, without
limitation, the right to vote, the right to receive dividends and
distributions and the right to participate upon liquidation of the
corporation, but excluding the right to receive a stock
certificate evidencing a fractional share.
(9) No holder of any shares of any class of the
corporation shall be entitled as of right to subscribe for,
purchase, or otherwise acquire any shares of any class which the
corporation proposes to issue, or any rights or options which the
corporation proposes to issue or to grant for the purchase of
shares of any class or for the purchase of any shares, bonds,
securities, or obligations of the corporation which are
convertible into or exchangeable for, or which carry any rights to
subscribe for, purchase, or otherwise acquire shares of any class
of the corporation; and any and all of such shares, bonds,
securities or obligations of the corporation, whether now or
hereafter authorized or created, may be issued, or may be reissued
or transferred if the same have been reacquired and have treasury
status, and any and all of such rights and options may be granted
by the Board of Directors to such persons, firms, corporations and
associations, and for such lawful consideration, and on such
terms, as the Board of Directors in its discretion may determine,
without first offering the same, or any thereof, to any said
holder.
SIXTH: (1) The number of directors of the corporation,
until such number shall be increased or decreased pursuant to the
by-laws of the corporation, is one. The number of directors shall
never be less than the minimum number prescribed by the Maryland
General Corporation Law.
(2) The name of the person who shall act as director of
the corporation until the first annual meeting or until his
successor or successors are duly chosen and qualify is as follows:
Mark N. Jacobs
(3) The initial by-laws of the corporation shall be
adopted by the directors at their organizational meeting or by
their informal written action, as the case may be. Thereafter,
the power to make, alter, and repeal the by-laws of the
corporation shall be vested in the Board of Directors of the
corporation.
(4) Any determination made in good faith by or pursuant
to the direction of the Board of Directors, as to: the amount of
the assets, debts, obligations, or liabilities of the corporation;
the amount of any reserves or charges set up and the propriety
thereof; the time of or purpose for creating such reserves or
charges; the use, alteration or cancellation of any reserves or
charges (whether or not any debt, obligation or liability for
which such reserves or charges shall have been created shall have
been paid or discharged or shall be then or thereafter required to
be paid or discharged); the value of any investment or fair value
of any other asset of the corporation; the amount of net
investment income; the number of shares of stock outstanding; the
estimated expense in connection with purchases or redemptions of
the corporation's stock; the ability to liquidate investments in
orderly fashion; the extent to which it is practicable to deliver
a cross-section of the portfolio of the corporation in payment for
any such shares, or as to any other matters relating to the issue,
sale, purchase, redemption and/or other acquisition or disposition
of investments or shares of the corporation, or the determination
of the net asset value of shares of the corporation shall be final
and conclusive, and shall be binding upon the corporation and all
holders of its shares, past, present and future, and shares of the
corporation are issued and sold on the condition and understanding
that any and all such determinations shall be binding as
aforesaid.
SEVENTH: (1) To the fullest extent that limitations on
the liability of directors and officers are permitted by the
Maryland General Corporation Law, no director or officer of the
corporation shall have any liability to the corporation or its
stockholders for damages. This limitation on liability applies to
events occurring at the time a person serves as a director or
officer of the corporation whether or not such person is a
director or officer at the time of any proceeding in which
liability is asserted.
(2) The corporation shall indemnify and advance
expenses to its currently acting and its former directors to the
fullest extent that indemnification of directors is permitted by
the Maryland General Corporation Law. The corporation shall
indemnify and advance expenses to its officers to the same extent
as its directors and to such further extent as is consistent with
law. The board of directors may, through a by-law, resolution or
agreement, make further provisions for indemnification of
directors, officers, employees and agents to the fullest extent
permitted by the Maryland General Corporation Law.
(3) No provision of this Article SEVENTH shall be
effective to protect or purport to protect any director or officer
of the corporation against any liability to the corporation or its
stockholders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
(4) References to the Maryland General Corporation Law
in this Article SEVENTH are to the law as from time to time
amended. No amendment to the Articles of Incorporation of the
corporation shall affect any right of any person under this
Article SEVENTH based on any event, omission or proceeding prior
to such amendment.
EIGHTH: Any holder of shares of stock of the
corporation may require the corporation to redeem and the
corporation shall be obligated to redeem at the option of such
holder all or any part of the shares of the corporation owned by
said holder, at the redemption price, pursuant to the method, upon
the terms and subject to the conditions hereinafter set forth:
(a) The redemption price per share shall be the
net asset value per share determined at such time or
times as the Board of Directors of the corporation shall
designate in accordance with any provision of the
Investment Company Act of 1940, any rule or regulation
thereunder or exemption or exception therefrom, or any
rule or regulation made or adopted by any securities
association registered under the Securities Exchange Act
of 1934.
(b) Net asset value per share of a class shall
be determined by dividing:
(i) The total value of the assets of
such class determined as provided in Subsec-
tion (c) below less, to the extent determined
by or pursuant to the direction of the Board
of Directors, all debts, obligations and
liabilities of such class (which debts,
obligations and liabilities shall include,
without limitation of the generality of the
foregoing, any and all debts, obligations,
liabilities, or claims, of any and every kind
and nature, fixed, accrued and otherwise,
including the estimated accrued expenses of
management and supervision, administration and
distribution and any reserves or charges for
any or all of the foregoing, whether for
taxes, expenses or otherwise) but excluding
such class' liability upon its shares and its
surplus, by
(ii) The total number of shares of such
class outstanding.
The Board of Directors is empowered, in its
absolute discretion, to establish other methods for
determining such net asset value whenever such other
methods are deemed by it to be necessary in order to
enable the corporation to comply with, or are deemed by
it to be desirable provided they are not inconsistent
with, any provision of the Investment Company Act of
1940 or any rule or regulation thereunder.
(c) In determining for the purposes of these
Articles of Incorporation the total value of the assets
of the corporation at any time, investments and any
other assets of the corporation shall be valued in such
manner as may be determined from time to time by the
Board of Directors.
(d) Payment of the redemption price by the
corporation may be made either in cash or in securities
or other assets at the time owned by the corporation or
partly in cash and partly in securities or other assets
at the time owned by the corporation. The value of any
part of such payment to be made in securities or other
assets of the corporation shall be the value employed in
determining the redemption price. Payment of the
redemption price shall be made on or before the seventh
day following the day on which the shares are properly
presented for redemption hereunder, except that delivery
of any securities included in any such payment shall be
made as promptly as any necessary transfers on the books
of the issuers whose securities are to be delivered may
be made.
The corporation, pursuant to resolution of the
Board of Directors, may deduct from the payment made for
any shares redeemed a liquidating charge not in excess
of five percent (5%) of the redemption price of the
shares so redeemed, and the Board of Directors may alter
or suspend any such liquidating charge from time to
time.
(e) Redemption of shares of stock by the
corporation is conditional upon the corporation having
funds or property legally available therefor.
(f) The corporation, either directly or through
an agent, may repurchase its shares, out of funds
legally available therefor, upon such terms and
conditions and for such consideration as the Board of
Directors shall deem advisable, by agreement with the
owner at a price not exceeding the net asset value per
share as determined by the corporation at such time or
times as the Board of Directors of the corporation shall
designate, less a charge not to exceed five percent (5%)
of such net asset value, if and as fixed by resolution
of the Board of Directors of the corporation from time
to time, and take all other steps deemed necessary or
advisable in connection therewith.
(g) The corporation, pursuant to resolution of
the Board of Directors, may cause the redemption, upon
the terms set forth in such resolution and in
subsections (a) through (e) and subsection (h) of this
Article EIGHTH, of shares of stock owned by stockholders
whose shares have an aggregate net asset value of five
hundred dollars or less or such other amount as may be
fixed from time to time by the Board of Directors.
Notwithstanding any other provision of this Article
EIGHTH, if certificates representing such shares have
been issued, the redemption price need not be paid by
the corporation until such certificates are presented in
proper form for transfer to the corporation or the agent
of the corporation appointed for such purpose; however,
the redemption shall be effective, in accordance with
the resolution of the Board of Directors, regardless of
whether or not such presentation has been made.
(h) The obligations set forth in this Article
EIGHTH may be suspended or postponed as may be
permissible under the Investment Company Act of 1940 and
the rules and regulations thereunder.
(i) The Board of Directors may establish other
terms and conditions and procedures for redemption,
including requirements as to delivery of certificates
evidencing shares, if issued.
NINTH: All persons who shall acquire stock or other
securities of the corporation shall acquire the same subject to
the provisions of the corporation's Charter, as from time to time
amended.
TENTH: From time to time any of the provisions of the
Charter of the corporation may be amended, altered or repealed,
including amendments which alter the contract rights of any class
of stock outstanding, and other provisions authorized by the Mary-
land General Corporation Law at the time in force may be added or
inserted in the manner and at the time prescribed by said Law, and
all rights at any time conferred upon the stockholders of the
corporation by its Charter are granted subject to the provisions
of this Article.
IN WITNESS WHEREOF, I have adopted and signed these
Articles of Incorporation and do hereby acknowledge that the
adoption and signing are my act.
Dated: June 25, 1992
David Stephens, Incorporator
BY-LAWS
OF
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
(A Maryland Corporation)
___________
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Certificates
representing shares of stock shall set forth thereon the
statements prescribed by Section 2-211 of the Maryland General
Corporation Law ("General Corporation Law") and by any other
applicable provision of law and shall be signed by the Chairman of
the Board or the President or a Vice President and countersigned
by the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer and may be sealed with the corporate seal.
The signatures of any such officers may be either manual or
facsimile signatures and the corporate seal may be either
facsimile or any other form of seal. In case any such officer who
has signed manually or by facsimile any such certificate ceases to
be such officer before the certificate is issued, it nevertheless
may be issued by the corporation with the same effect as if the
officer had not ceased to be such officer as of the date of its
issue.
No certificate representing shares of stock shall be
issued for any share of stock until such share is fully paid,
except as otherwise authorized in Section 2-207 of the General
Corporation Law.
The corporation may issue a new certificate of stock in
place of any certificate theretofore issued by it, alleged to have
been lost, stolen or destroyed, and the Board of Directors may
require, in its discretion, the owner of any such certificate or
his legal representative to give bond, with sufficient surety, to
the corporation to indemnify it against any loss or claim that may
arise by reason of the issuance of a new certificate.
2. SHARE TRANSFERS. Upon compliance with provisions
restricting the transferability of shares of stock, if any,
transfers of shares of stock of the corporation shall be made only
on the stock transfer books of the corporation by the record
holder thereof or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary of the
corporation or with a transfer agent or a registrar, if any, and
on surrender of the certificate or certificates for such shares of
stock properly endorsed and the payment of all taxes due thereon.
3. RECORD DATE FOR STOCKHOLDERS. The Board of
Directors may fix, in advance, a date as the record date for the
purpose of determining stockholders entitled to notice of, or to
vote at, any meeting of stockholders, or stockholders entitled to
receive payment of any dividend or the allotment of any rights or
in order to make a determination of stockholders for any other
proper purpose. Such date, in any case, shall be not more than
90 days, and in case of a meeting of stockholders not less than
10 days, prior to the date on which the meeting or particular
action requiring such determination of stockholders is to be held
or taken. In lieu of fixing a record date, the Board of Directors
may provide that the stock transfer books shall be closed for a
stated period but not to exceed 20 days. If the stock transfer
books are closed for the purpose of determining stockholders
entitled to notice of, or to vote at, a meeting of stockholders,
such books shall be closed for at least 10 days immediately
preceding such meeting. If no record date is fixed and the stock
transfer books are not closed for the determination of stock-
holders: (1) The record date for the determination of stock-
holders entitled to notice of, or to vote at, a meeting of
stockholders shall be at the close of business on the day on which
the notice of meeting is mailed or the day 30 days before the
meeting, whichever is the closer date to the meeting; and (2) The
record date for the determination of stockholders entitled to
receive payment of a dividend or an allotment of any rights shall
be at the close of business on the day on which the resolution of
the Board of Directors declaring the dividend or allotment of
rights is adopted, provided that the payment or allotment date
shall not be more than 60 days after the date on which the
resolution is adopted.
4. MEANING OF CERTAIN TERMS. As used herein in respect
of the right to notice of a meeting of stockholders or a waiver
thereof or to participate or vote thereat or to consent or dissent
in writing in lieu of a meeting, as the case may be, the term
"share of stock" or "shares of stock" or "stockholder" or "stock-
holders" refers to an outstanding share or shares of stock and to
a holder or holders of record of outstanding shares of stock when
the corporation is authorized to issue only one class of shares of
stock and said reference also is intended to include any outstand-
ing share or shares of stock and any holder or holders of record
of outstanding shares of stock of any class or series upon which
or upon whom the Charter confers such rights where there are two
or more classes or series of shares or upon which or upon whom the
General Corporation Law confers such rights notwithstanding that
the Charter may provide for more than one class or series of
shares of stock, one or more of which are limited or denied such
rights thereunder.
5. STOCKHOLDER MEETINGS.
- ANNUAL MEETINGS. If a meeting of the stockholders of
the corporation is required by the Investment Company Act of 1940,
as amended, to elect the directors, then there shall be submitted
to the stockholders at such meeting the question of the election
of directors, and a meeting called for that purpose shall be
designated the annual meeting of stockholders for that year. In
other years in which no action by stockholders is required for the
aforesaid election of directors, no annual meeting need be held.
- SPECIAL MEETINGS. Special stockholder meetings for
any purpose may be called by the Board of Directors or the
President and shall be called by the Secretary for the purpose
of removing a Director and for all other purposes whenever the
holders of shares entitled to at least ten percent of all the
votes entitled to be cast at such meeting shall make a duly
authorized request that such meeting be called. Such request
shall state the purpose of such meeting and the matters proposed
to be acted on thereat, and no other business shall be transacted
at any such special meeting. Notwithstanding the foregoing,
unless requested by stockholders entitled to cast a majority of
the votes entitled to be cast at the meeting, a special meeting of
the stockholders need not be called at the request of stockholders
to consider any matter that is substantially the same as a matter
voted on at any special meeting of the stockholders held during
the preceding twelve (12) months.
- PLACE AND TIME. Stockholder meetings shall be held
at such place, either within the State of Maryland or at such
other place within the United States, and at such date or dates as
the directors from time to time may fix.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER OF NOTICE.
Written or printed notice of all meetings shall be given by the
Secretary and shall state the time and place of the meeting. The
notice of a special meeting shall state in all instances the
purpose or purposes for which the meeting is called. Written or
printed notice of any meeting shall be given to each stockholder
either by mail or by presenting it to him personally or by leaving
it at his residence or usual place of business not less than ten
days and not more than ninety days before the date of the meeting,
unless any provisions of the General Corporation Law shall
prescribe a different elapsed period of time, to each stockholder
at his address appearing on the books of the corporation or the
address supplied by him for the purpose of notice. If mailed,
notice shall be deemed to be given when deposited in the United
States mail addressed to the stockholder at his post office
address as it appears on the records of the corporation with
postage thereon prepaid. Whenever any notice of the time, place
or purpose of any meeting of stockholders is required to be given
under the provisions of these by-laws or of the General Corpora-
tion Law, a waiver thereof in writing, signed by the stockholder
and filed with the records of the meeting, whether before or after
the holding thereof, or actual attendance or representation at the
meeting shall be deemed equivalent to the giving of such notice to
such stockholder. The foregoing requirements of notice also shall
apply, whenever the corporation shall have any class of stock
which is not entitled to vote, to holders of stock who are not en-
titled to vote at the meeting, but who are entitled to notice
thereof and to dissent from any action taken thereat.
- STATEMENT OF AFFAIRS. The President of the corpora-
tion or, if the Board of Directors shall determine otherwise, some
other executive officer thereof, shall prepare or cause to be pre-
pared annually a full and correct statement of the affairs of the
corporation, including a balance sheet and a financial statement
of operations for the preceding fiscal year, which shall be filed
at the principal office of the corporation in the State of Mary-
land.
- CONDUCT OF MEETING. Meetings of the stockholders
shall be presided over by one of the following officers in the
order of seniority and if present and acting: the President, the
Chairman of the Board, a Vice President or, if none of the
foregoing is in office and present and acting, by a chairman to be
chosen by the stockholders. The Secretary of the corporation or,
in his absence, an Assistant Secretary, shall act as secretary of
every meeting, but if neither the Secretary nor an Assistant
Secretary is present the chairman of the meeting shall appoint a
secretary of the meeting.
- PROXY REPRESENTATION. Every stockholder may author-
ize another person or persons to act for him by proxy in all
matters in which a stockholder is entitled to participate, whether
for the purposes of determining his presence at a meeting, or
whether by waiving notice of any meeting, voting or participating
at a meeting, expressing consent or dissent without a meeting or
otherwise. Every proxy shall be executed in writing by the stock-
holder or by his duly authorized attorney-in-fact and filed with
the Secretary of the corporation. No unrevoked proxy shall be
valid after eleven months from the date of its execution, unless a
longer time is expressly provided therein.
- INSPECTORS OF ELECTION. The directors, in advance of
any meeting, may, but need not, appoint one or more inspectors to
act at the meeting or any adjournment thereof. If an inspector or
inspectors are not appointed, the person presiding at the meeting
may, but need not, appoint one or more inspectors. In case any
person who may be appointed as an inspector fails to appear or
act, the vacancy may be filled by appointment made by the direc-
tors in advance of the meeting or at the meeting by the person
presiding thereat. Each inspector, if any, before entering upon
the discharge of his duties, shall take and sign an oath to
execute faithfully the duties of inspector at such meeting with
strict impartiality and according to the best of his ability. The
inspectors, if any, shall determine the number of shares outstand-
ing and the voting power of each, the shares represented at the
meeting, the existence of a quorum and the validity and effect of
proxies, and shall receive votes, ballots or consents, hear and
determine all challenges and questions arising in connection with
the right to vote, count and tabulate all votes, ballots or
consents, determine the result and do such acts as are proper to
conduct the election or vote with fairness to all stockholders.
On request of the person presiding at the meeting or any stock-
holder, the inspector or inspectors, if any, shall make a report
in writing of any challenge, question or matter determined by him
or them and execute a certificate of any fact found by him or
them.
- VOTING. Each share of stock shall entitle the holder
thereof to one vote, except in the election of directors, at which
each said vote may be cast for as many persons as there are direc-
tors to be elected. Except for election of directors, a majority
of the votes cast at a meeting of stockholders, duly called and at
which a quorum is present, shall be sufficient to take or
authorize action upon any matter which may come before a meeting,
unless more than a majority of votes cast is required by the
corporation's Articles of Incorporation. A plurality of all the
votes cast at a meeting at which a quorum is present shall be
sufficient to elect a director.
6. INFORMAL ACTION. Any action required or permitted
to be taken at a meeting of stockholders may be taken without a
meeting if a consent in writing, setting forth such action, is
signed by all the stockholders entitled to vote on the subject
matter thereof and any other stockholders entitled to notice of a
meeting of stockholders (but not to vote thereat) have waived in
writing any rights which they may have to dissent from such action
and such consent and waiver are filed with the records of the
corporation.
ARTICLE II
BOARD OF DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs
of the corporation shall be managed under the direction of a Board
of Directors. The use of the phrase "entire board" herein refers
to the total number of directors which the corporation would have
if there were no vacancies.
2. QUALIFICATIONS AND NUMBER. Each director shall be a
natural person of full age. A director need not be a stockholder,
a citizen of the United States or a resident of the State of Mary-
land. The initial Board of Directors shall consist of one person.
Thereafter, the number of directors constituting the entire board
shall never be less than three or the number of stockholders,
whichever is less. At any regular meeting or at any special
meeting called for that purpose, a majority of the entire Board of
Directors may increase or decrease the number of directors,
provided that the number thereof shall never be less than three or
the number of stockholders, whichever is less, nor more than
twelve and further provided that the tenure of office of a
director shall not be affected by any decrease in the number of
directors.
3. ELECTION AND TERM. The first Board of Directors
shall consist of the director named in the Articles of Incorpora-
tion and shall hold office until the first meeting of stockholders
or until his successor has been elected and qualified.
Thereafter, directors who are elected at a meeting of
stockholders, and directors who are elected in the interim to fill
vacancies and newly created directorships, shall hold office until
their successors have been elected and qualified. Newly created
directorships and any vacancies in the Board of Directors, other
than vacancies resulting from the removal of directors by the
stockholders, may be filled by the Board of Directors, subject to
the provisions of the Investment Company Act of 1940. Newly
created directorships filled by the Board of Directors shall be by
action of a majority of the entire Board of Directors. All other
vacancies to be filled by the Board of Directors may be filled by
a majority of the remaining members of the Board of Directors,
although such majority is less than a quorum thereof.
4. MEETINGS.
- TIME. Meetings shall be held at such time as the
Board shall fix, except that the first meeting of a newly elected
Board shall be held as soon after its election as the directors
conveniently may assemble.
- PLACE. Meetings shall be held at such place within
or without the State of Maryland as shall be fixed by the Board.
- CALL. No call shall be required for regular meetings
for which the time and place have been fixed. Special meetings
may be called by or at the direction of the President or of a
majority of the directors in office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. Whenever
any notice of the time, place or purpose of any meeting of direc-
tors or any committee thereof is required to be given under the
provisions of the General Corporation Law or of these by-laws, a
waiver thereof in writing, signed by the director or committee
member entitled to such notice and filed with the records of the
meeting, whether before or after the holding thereof, or actual
attendance at the meeting shall be deemed equivalent to the giving
of such notice to such director or such committee member.
- QUORUM AND ACTION. A majority of the entire Board of
Directors shall constitute a quorum except when a vacancy or
vacancies prevents such majority, whereupon a majority of the
directors in office shall constitute a quorum, provided such
majority shall constitute at least one-third of the entire Board
and, in no event, less than two directors. A majority of the
directors present, whether or not a quorum is present, may adjourn
a meeting to another time and place. Except as otherwise
specifically provided by the Articles of Incorporation, the
General Corporation Law or these by-laws, the action of a majority
of the directors present at a meeting at which a quorum is present
shall be the action of the Board of Directors.
- CHAIRMAN OF THE MEETING. The Chairman of the Board,
if any and if present and acting, or the President or any other
director chosen by the Board, shall preside at all meetings.
5. REMOVAL OF DIRECTORS. Any or all of the directors
may be removed for cause or without cause by the stockholders, who
may elect a successor or successors to fill any resulting vacancy
or vacancies for the unexpired term of the removed director or
directors.
6. COMMITTEES. The Board of Directors may appoint from
among its members an Executive Committee and other committees
composed of two or more directors and may delegate to such
committee or committees, in the intervals between meetings of
the Board of Directors, any or all of the powers of the Board of
Directors in the management of the business and affairs of the
corporation, except the power to amend the by-laws, to approve any
consolidation, merger, share exchange or transfer of assets, to
declare dividends, to issue stock or to recommend to stockholders
any action requiring the stockholders' approval. In the absence
of any member of any such committee, the members thereof present
at any meeting, whether or not they constitute a quorum, may
appoint a member of the Board of Directors to act in the place of
such absent member.
7. INFORMAL ACTION. Any action required or permitted
to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if a written
consent to such action is signed by all members of the Board of
Directors or any such committee, as the case may be, and such
written consent is filed with the minutes of the proceedings of
the Board or any such committee.
Members of the Board of Directors or any committee
designated thereby may participate in a meeting of such Board or
committee by means of a conference telephone or similar communica-
tions equipment by means of which all persons participating in the
meeting can hear each other at the same time. Participation by
such means shall constitute presence in person at a meeting.
ARTICLE III
OFFICERS
The corporation may have a Chairman of the Board and
shall have a President, a Secretary and a Treasurer, who shall
be elected by the Board of Directors, and may have such other
officers, assistant officers and agents as the Board of Directors
shall authorize from time to time. Any two or more offices,
except those of President and Vice President, may be held by the
same person, but no person shall execute, acknowledge or verify
any instrument in more than one capacity, if such instrument is
required by law to be executed, acknowledged or verified by two or
more officers.
Any officer or agent may be removed by the Board of
Directors whenever, in its judgment, the best interests of the
corporation will be served thereby.
ARTICLE IV
PRINCIPAL OFFICE - RESIDENT AGENT - STOCK LEDGER
The address of the principal office of the corporation
in the State of Maryland prescribed by the General Corporation Law
is 32 South Street, c/o The Corporation Trust Incorporated,
Baltimore, Maryland 21202. The name and address of the resident
agent in the State of Maryland prescribed by the General
Corporation Law are: The Corporation Trust Incorporated, 32 South
Street, Baltimore, Maryland 21202.
The corporation shall maintain, at its principal office
in the State of Maryland prescribed by the General Corporation Law
or at the business office or an agency of the corporation, an
original or duplicate stock ledger containing the names and ad-
dresses of all stockholders and the number of shares of each class
held by each stockholder. Such stock ledger may be in written
form or any other form capable of being converted into written
form within a reasonable time for visual inspection.
The corporation shall keep at said principal office in
the State of Maryland the original or a certified copy of the by-
laws, including all amendments thereto, and shall duly file
thereat the annual statement of affairs of the corporation
prescribed by Section 2-314 of the General Corporation Law.
ARTICLE V
CORPORATE SEAL
The corporate seal shall have inscribed thereon the name
of the corporation and shall be in such form and contain such
other words and/or figures as the Board of Directors shall deter-
mine or the law require.
ARTICLE VI
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and
shall be subject to change, by the Board of Directors.
ARTICLE VII
CONTROL OVER BY-LAWS
The power to make, alter, amend and repeal the by-laws
is vested in the Board of Directors of the corporation.
ARTICLE VIII
INDEMNIFICATION
1. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The
corporation shall indemnify its directors to the fullest extent
that indemnification of directors is permitted by the law. The
corporation shall indemnify its officers to the same extent as its
directors and to such further extent as is consistent with law.
The corporation shall indemnify its directors and officers who
while serving as directors or officers also serve at the request
of the corporation as a director, officer, partner, trustee,
employee, agent or fiduciary of another corporation, partnership,
joint venture, trust, other enterprise or employee benefit plan to
the same extent as its directors and, in the case of officers, to
such further extent as is consistent with law. The indemnifica-
tion and other rights provided by this Article shall continue as
to a person who has ceased to be a director or officer and shall
inure to the benefit of the heirs, executors and administrators of
such a person. This Article shall not protect any such person
against any liability to the corporation or any stockholder
thereof to which such person would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office
("disabling conduct").
2. ADVANCES. Any current or former director or officer
of the corporation seeking indemnification within the scope of
this Article shall be entitled to advances from the corporation
for payment of the reasonable expenses incurred by him in con-
nection with the matter as to which he is seeking indemnification
in the manner and to the fullest extent permissible under the
General Corporation Law. The person seeking indemnification shall
provide to the corporation a written affirmation of his good faith
belief that the standard of conduct necessary for indemni-fication
by the corporation has been met and a written undertaking to repay
any such advance if it should ultimately be determined that the
standard of conduct has not been met. In addition, at least one
of the following additional conditions shall be met: (a) the
person seeking indemnification shall provide a security in form
and amount acceptable to the corporation for his undertaking;
(b) the corporation is insured against losses arising by reason of
the advance; or (c) a majority of a quorum of directors of the
corporation who are neither "interested persons" as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as
amended, nor parties to the proceeding ("disinterested non-party
directors"), or independent legal counsel, in a written opinion,
shall have determined, based on a review of facts readily avail-
able to the corporation at the time the advance is proposed to be
made, that there is reason to believe that the person seeking in-
demnification will ultimately be found to be entitled to
indemnification.
3. PROCEDURE. At the request of any person claiming
indemnification under this Article, the Board of Directors shall
determine, or cause to be determined, in a manner consistent with
the General Corporation Law, whether the standards required by
this Article have been met. Indemnification shall be made only
following: (a) a final decision on the merits by a court or other
body before whom the proceeding was brought that the person to be
indemnified was not liable by reason of disabling conduct or
(b) in the absence of such a decision, a reasonable determination,
based upon a review of the facts, that the person to be indemni-
fied was not liable by reason of disabling conduct by (i) the vote
of a majority of a quorum of disinterested non-party directors or
(ii) an independent legal counsel in a written opinion.
4. INDEMNIFICATION OF EMPLOYEES AND AGENTS. Employees
and agents who are not officers or directors of the corporation
may be indemnified, and reasonable expenses may be advanced to
such employees or agents, as may be provided by action of the
Board of Directors or by contract, subject to any limitations
imposed by the Investment Company Act of 1940, as amended.
5. OTHER RIGHTS. The Board of Directors may make
further provision consistent with law for indemnification and
advance of expenses to directors, officers, employees and agents
by resolution, agreement or otherwise. The indemnification
provided by this Article shall not be deemed exclusive of any
other right, with respect to indemnification or otherwise, to
which those seeking indemnification may be entitled under any
insurance or other agreement or resolution of stockholders or
disinterested non-party directors or otherwise.
6. AMENDMENTS. References in this Article are to the
General Corporation Law and to the Investment Company Act of 1940
as from time to time amended. No amendment of the by-laws shall
affect any right of any person under this Article based on any
event, omission or proceeding prior to the amendment.
Dated: June 26, 1992
Amended: November 8, 1995
MANAGEMENT AGREEMENT
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
200 Park Avenue
New York, New York 10166
August 24, 1994
As Amended, August 24, 1995
The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Dear Sirs:
The above-named investment company (the "Fund")
consisting of the series named on Schedule 1 hereto, as such
Schedule may be revised from time to time (each, a "Series"),
herewith confirms its agreement with you as follows:
The Fund desires to employ its capital by investing and
reinvesting the same in investments of the type and in accordance
with the limitations specified in its charter documents and in
its Prospectus and Statement of Additional Information as from
time to time in effect, copies of which have been or will be
submitted to you, and in such manner and to such extent as from
time to time may be approved by the Fund's Board. The Fund
desires to employ you to act as its investment adviser.
In this connection it is understood that from time to
time you will employ or associate with yourself such person or
persons as you may believe to be particularly fitted to assist
you in the performance of this Agreement. Such person or persons
may be officers or employees who are employed by both you and the
Fund. The compensation of such person or persons shall be paid
by you and no obligation may be incurred on the Fund's behalf in
any such respect.
Subject to the supervision and approval of the Fund's
Board, you will provide investment management of each Series'
portfolio in accordance with such Series' investment objectives
and policies as stated in the Fund's Prospectus and Statement of
Additional Information as from time to time in effect. In
connection therewith, you will obtain and provide investment
research and will supervise each Series' investments and conduct
a continuous program of investment, evaluation and, if
appropriate, sale and reinvestment of such Series' assets. You
will furnish to the Fund such statistical information, with
respect to the investments which a Series may hold or contemplate
purchasing, as the Fund may reasonably request. The Fund wishes
to be informed of important developments materially affecting any
Series' portfolio and shall expect you, on your own initiative,
to furnish to the Fund from time to time such information as you
may believe appropriate for this purpose.
In addition, you will supply office facilities (which
may be in your own offices), data processing services, clerical,
accounting and bookkeeping services, internal auditing and legal
services, internal executive and administrative services, and
stationery and office supplies; prepare reports to each Series'
stockholders, tax returns, reports to and filings with the
Securities and Exchange Commission and state Blue Sky
authorities; calculate the net asset value of each Series'
shares; and generally assist in all aspects of the Fund's
operations. You shall have the right, at your expense, to engage
other entities to assist you in performing some or all of the
obligations set forth in this paragraph, provided each such
entity enters into an agreement with you in form and substance
reasonably satisfactory to the Fund. You agree to be liable for
the acts or omissions of each such entity to the same extent as
if you had acted or failed to act under the circumstances.
You shall exercise your best judgment in rendering the
services to be provided to the Fund hereunder and the Fund agrees
as an inducement to your undertaking the same that you shall not
be liable hereunder for any error of judgment or mistake of law
or for any loss suffered by one or more Series, provided that
nothing herein shall be deemed to protect or purport to protect
you against any liability to the Fund or a Series or to its
security holders to which you would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in
the performance of your duties hereunder, or by reason of your
reckless disregard of your obligations and duties hereunder.
In consideration of services rendered pursuant to this
Agreement, the Fund will pay you on the first business day of
each month a fee at the rate set forth opposite each Series' name
on Schedule 1 hereto. Net asset value shall be computed on such
days and at such time or times as described in the Fund's then-
current Prospectus and Statement of Additional Information. The
fee for the period from the date of the commencement of the
public sale of a Series' shares to the end of the month during
which such sale shall have been commenced shall be pro-rated
according to the proportion which such period bears to the full
monthly period, and upon any termination of this Agreement before
the end of any month, the fee for such part of a month shall be
pro-rated according to the proportion which such period bears to
the full monthly period and shall be payable upon the date of
termination of this Agreement.
For the purpose of determining fees payable to you, the
value of each Series' net assets shall be computed in the manner
specified in the Fund's charter documents for the computation of
the value of each Series' net assets.
You will bear all expenses in connection with the
performance of your services under this Agreement. All other
expenses to be incurred in the operation of the Fund will be
borne by the Fund, except to the extent specifically assumed by
you. The expenses to be borne by the Fund include, without
limitation, the following: organizational costs, taxes,
interest, loan commitment fees, interest and distributions paid
on securities sold short, brokerage fees and commissions, if any,
fees of Board members who are not your officers, directors or
employees or holders of 5% or more of your or any of your
affiliates' outstanding voting securities, Securities and Ex-
change Commission fees and state Blue Sky qualification fees,
advisory fees, charges of custodians, transfer and dividend
disbursing agents' fees, certain insurance premiums, industry
association fees, outside auditing and legal expenses, costs of
independent pricing services, costs of maintaining the Fund's
existence, costs attributable to investor services (including,
without limitation, telephone and personnel expenses), costs of
preparing and printing prospectuses and statements of additional
information for regulatory purposes and for distribution to
existing stockholders, costs of stockholders' reports and
meetings, and any extraordinary expenses.
As to each Series, if in any fiscal year the aggregate
expenses of the Fund (including fees pursuant to this Agreement,
but excluding interest, taxes, brokerage and, with the prior
written consent of the necessary state securities commissions,
extraordinary expenses) exceed the expense limitation of any
state having jurisdiction over the Series, the Fund may deduct
from the fees to be paid hereunder, or you will bear, such excess
expense to the extent required by state law. Your obligation
pursuant hereto will be limited to the amount of your fees here-
under. Such deduction or payment, if any, will be estimated
daily, and reconciled and effected or paid, as the case may be,
on a monthly basis.
The Fund understands that you now act, and that from
time to time hereafter you may act, as investment adviser to one
or more other investment companies and fiduciary or other managed
accounts, and the Fund has no objection to your so acting,
provided that when the purchase or sale of securities of the same
issuer is suitable for the investment objectives of two or more
companies or accounts managed by you which have available funds
for investment, the available securities will be allocated in a
manner believed by you to be equitable to each company or
account. It is recognized that in some cases this procedure may
adversely affect the price paid or received by one or more Series
or the size of the position obtainable for or disposed of by one
or more Series.
In addition, it is understood that the persons employed
by you to assist in the performance of your duties hereunder will
not devote their full time to such service and nothing contained
herein shall be deemed to limit or restrict your right or the
right of any of your affiliates to engage in and devote time and
attention to other businesses or to render services of whatever
kind or nature.
You shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, except for a
loss resulting from willful misfeasance, bad faith or gross
negligence on your part in the performance of your duties or from
reckless disregard by you of your obligations and duties under
this Agreement. Any person, even though also your officer,
director, partner, employee or agent, who may be or become an
officer, Board member, employee or agent of the Fund, shall be
deemed, when rendering services to the Fund or acting on any
business of the Fund, to be rendering such services to or acting
solely for the Fund and not as your officer, director, partner,
employee or agent or one under your control or direction even
though paid by you.
As to each Series, this Agreement shall continue until
the date set forth opposite such Series' name on Schedule 1
hereto (the "Reapproval Date") and thereafter shall continue
automatically for successive annual periods ending on the day of
each year set forth opposite the Series' name on Schedule 1
hereto (the "Reapproval Day"), provided such continuance is
specifically approved at least annually by (i) the Fund's Board
or (ii) vote of a majority (as defined in the Investment Company
Act of 1940) of such Series' outstanding voting securities,
provided that in either event its continuance also is approved by
a majority of the Fund's Board members who are not "interested
persons" (as defined in said Act) of any party to this Agreement,
by vote cast in person at a meeting called for the purpose of
voting on such approval. As to each Series, this Agreement is
terminable without penalty, on 60 days' notice, by the Fund's
Board or by vote of holders of a majority of such Series' shares
or, upon not less than 90 days' notice, by you. This Agreement
also will terminate automatically, as to the relevant Series, in
the event of its assignment (as defined in said Act).
The Fund recognizes that from time to time your
directors, officers and employees may serve as directors,
trustees, partners, officers and employees of other corporations,
business trusts, partnerships or other entities (including other
investment companies) and that such other entities may include
the name "Dreyfus" as part of their name, and that your
corporation or its affiliates may enter into investment advisory
or other agreements with such other entities. If you cease to
act as the Fund's investment adviser, the Fund agrees that, at
your request, the Fund will take all necessary action to change
the name of the Fund to a name not including "Dreyfus" in any
form or combination of words.
If the foregoing is in accordance with your
understanding, will you kindly so indicate by signing and
returning to us the enclosed copy hereof.
Very truly yours,
DREYFUS INVESTMENT GRADE
BOND FUNDS, INC.
By:___________________________
Accepted:
THE DREYFUS CORPORATION
By:_______________________________
SCHEDULE 1
Annual Fee as
a Percentage
of Average
Daily Net
Name of Series Assets Reapproval Date Reapproval Day
Dreyfus Intermediate
Term Income Fund .75% July 29, 1997 July 29th
Dreyfus Short Term
Income Fund .50% July 29, 1995 July 29th
DISTRIBUTION AGREEMENT
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
200 Park Avenue
New York, New York 10166
August 24, 1994
As Amended, August 24, 1995
Premier Mutual Fund Services, Inc.
One Exchange Place
Tenth Floor
Boston, Massachusetts 02109
Dear Sirs:
This is to confirm that, in consideration of the agree-
ments hereinafter contained, the above-named investment company
(the "Fund") has agreed that you shall be, for the period of
this agreement, the distributor of (a) shares of each Series of
the Fund set forth on Exhibit A hereto, as such Exhibit may be
revised from time to time (each, a "Series") or (b) if no Series
are set forth on such Exhibit, shares of the Fund. For purposes
of this agreement the term "Shares" shall mean the authorized
shares of the relevant Series, if any, and otherwise shall mean
the Fund's authorized shares.
1. Services as Distributor
1.1 You will act as agent for the distribution of
Shares covered by, and in accordance with, the registration
statement and prospectus then in effect under the Securities Act
of 1933, as amended, and will transmit promptly any orders
received by you for purchase or redemption of Shares to the
Transfer and Dividend Disbursing Agent for the Fund of which the
Fund has notified you in writing.
1.2 You agree to use your best efforts to solicit
orders for the sale of Shares. It is contemplated that you will
enter into sales or servicing agreements with securities
dealers, financial institutions and other industry
professionals, such as investment advisers, accountants and
estate planning firms, and in so doing you will act only on your
own behalf as principal.
1.3 You shall act as distributor of Shares in
compliance with all applicable laws, rules and regulations,
including, without limitation, all rules and regulations made or
adopted pursuant to the Investment Company Act of 1940, as
amended, by the Securities and Exchange Commission or any
securities association registered under the Securities Exchange
Act of 1934, as amended.
1.4 Whenever in their judgment such action is
warranted by market, economic or political conditions, or by
abnormal circumstances of any kind, the Fund's officers may
decline to accept any orders for, or make any sales of, any
Shares until such time as they deem it advisable to accept such
orders and to make such sales and the Fund shall advise you
promptly of such determination.
1.5 The Fund agrees to pay all costs and expenses in
connection with the registration of Shares under the Securities
Act of 1933, as amended, and all expenses in connection with
maintaining facilities for the issue and transfer of Shares and
for supplying information, prices and other data to be furnished
by the Fund hereunder, and all expenses in connection with the
preparation and printing of the Fund's prospectuses and
statements of additional information for regulatory purposes and
for distribution to shareholders; provided, however, that
nothing contained herein shall be deemed to require the Fund to
pay any of the costs of advertising the sale of Shares.
1.6 The Fund agrees to execute any and all documents
and to furnish any and all information and otherwise to take all
actions which may be reasonably necessary in the discretion of
the Fund's officers in connection with the qualification of
Shares for sale in such states as you may designate to the Fund
and the Fund may approve, and the Fund agrees to pay all
expenses which may be incurred in connection with such
qualification. You shall pay all expenses connected with your
own qualification as a dealer under state or Federal laws and,
except as otherwise specifically provided in this agreement, all
other expenses incurred by you in connection with the sale of
Shares as contemplated in this agreement.
1.7 The Fund shall furnish you from time to time, for
use in connection with the sale of Shares, such information with
respect to the Fund or any relevant Series and the Shares as you
may reasonably request, all of which shall be signed by one or
more of the Fund's duly authorized officers; and the Fund
warrants that the statements contained in any such information,
when so signed by the Fund's officers, shall be true and
correct. The Fund also shall furnish you upon request with:
(a) semi-annual reports and annual audited reports of the Fund's
books and accounts made by independent public accountants
regularly retained by the Fund, (b) quarterly earnings
statements prepared by the Fund, (c) a monthly itemized list of
the securities in the Fund's or, if applicable, each Series'
portfolio, (d) monthly balance sheets as soon as practicable
after the end of each month, and (e) from time to time such
additional information regarding the Fund's financial condition
as you may reasonably request.
1.8 The Fund represents to you that all registration
statements and prospectuses filed by the Fund with the Securi-
ties and Exchange Commission under the Securities Act of 1933,
as amended, and under the Investment Company Act of 1940, as
amended, with respect to the Shares have been carefully prepared
in conformity with the requirements of said Acts and rules and
regulations of the Securities and Exchange Commission there-
under. As used in this agreement the terms "registration state-
ment" and "prospectus" shall mean any registration statement and
prospectus, including the statement of additional information
incorporated by reference therein, filed with the Securities and
Exchange Commission and any amendments and supplements thereto
which at any time shall have been filed with said Commission.
The Fund represents and warrants to you that any registration
statement and prospectus, when such registration statement
becomes effective, will contain all statements required to be
stated therein in conformity with said Acts and the rules and
regulations of said Commission; that all statements of fact
contained in any such registration statement and prospectus will
be true and correct when such registration statement becomes
effective; and that neither any registration statement nor any
prospectus when such registration statement becomes effective
will include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading. The Fund may but
shall not be obligated to propose from time to time such amend-
ment or amendments to any registration statement and such
supplement or supplements to any prospectus as, in the light of
future developments, may, in the opinion of the Fund's counsel,
be necessary or advisable. If the Fund shall not propose such
amendment or amendments and/or supplement or supplements within
fifteen days after receipt by the Fund of a written request from
you to do so, you may, at your option, terminate this agreement
or decline to make offers of the Fund's securities until such
amendments are made. The Fund shall not file any amendment to
any registration statement or supplement to any prospectus
without giving you reasonable notice thereof in advance;
provided, however, that nothing contained in this agreement
shall in any way limit the Fund's right to file at any time such
amendments to any registration statement and/or supplements to
any prospectus, of whatever character, as the Fund may deem
advisable, such right being in all respects absolute and
unconditional.
1.9 The Fund authorizes you to use any prospectus in
the form furnished to you from time to time, in connection with
the sale of Shares. The Fund agrees to indemnify, defend and
hold you, your several officers and directors, and any person
who controls you within the meaning of Section 15 of the Securi-
ties Act of 1933, as amended, free and harmless from and against
any and all claims, demands, liabilities and expenses (including
the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection there-
with) which you, your officers and directors, or any such con-
trolling person, may incur under the Securities Act of 1933, as
amended, or under common law or otherwise, arising out of or
based upon any untrue statement, or alleged untrue statement, of
a material fact contained in any registration statement or any
prospectus or arising out of or based upon any omission, or
alleged omission, to state a material fact required to be stated
in either any registration statement or any prospectus or
necessary to make the statements in either thereof not
misleading; provided, however, that the Fund's agreement to
indemnify you, your officers or directors, and any such control-
ling person shall not be deemed to cover any claims, demands,
liabilities or expenses arising out of any untrue statement or
alleged untrue statement or omission or alleged omission made in
any registration statement or prospectus in reliance upon and in
conformity with written information furnished to the Fund by you
specifically for use in the preparation thereof. The Fund's
agreement to indemnify you, your officers and directors, and any
such controlling person, as aforesaid, is expressly conditioned
upon the Fund's being notified of any action brought against
you, your officers or directors, or any such controlling person,
such notification to be given by letter or by telegram addressed
to the Fund at its address set forth above within ten days after
the summons or other first legal process shall have been served.
The failure so to notify the Fund of any such action shall not
relieve the Fund from any liability which the Fund may have to
the person against whom such action is brought by reason of any
such untrue, or alleged untrue, statement or omission, or
alleged omission, otherwise than on account of the Fund's
indemnity agreement contained in this paragraph 1.9. The Fund
will be entitled to assume the defense of any suit brought to
enforce any such claim, demand or liability, but, in such case,
such defense shall be conducted by counsel of good standing
chosen by the Fund and approved by you. In the event the Fund
elects to assume the defense of any such suit and retain counsel
of good standing approved by you, the defendant or defendants in
such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case the Fund does not
elect to assume the defense of any such suit, or in case you do
not approve of counsel chosen by the Fund, the Fund will
reimburse you, your officers and directors, or the controlling
person or persons named as defendant or defendants in such suit,
for the fees and expenses of any counsel retained by you or
them. The Fund's indemnification agreement contained in this
paragraph 1.9 and the Fund's representations and warranties in
this agreement shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of
you, your officers and directors, or any controlling person, and
shall survive the delivery of any Shares. This agreement of
indemnity will inure exclusively to your benefit, to the benefit
of your several officers and directors, and their respective
estates, and to the benefit of any controlling persons and their
successors. The Fund agrees promptly to notify you of the
commencement of any litigation or proceedings against the Fund
or any of its officers or Board members in connection with the
issue and sale of Shares.
1.10 You agree to indemnify, defend and hold the Fund,
its several officers and Board members, and any person who con-
trols the Fund within the meaning of Section 15 of the Securi-
ties Act of 1933, as amended, free and harmless from and against
any and all claims, demands, liabilities and expenses (including
the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection there-
with) which the Fund, its officers or Board members, or any such
controlling person, may incur under the Securities Act of 1933,
as amended, or under common law or otherwise, but only to the
extent that such liability or expense incurred by the Fund, its
officers or Board members, or such controlling person resulting
from such claims or demands, shall arise out of or be based upon
any untrue, or alleged untrue, statement of a material fact
contained in information furnished in writing by you to the Fund
specifically for use in the Fund's registration statement and
used in the answers to any of the items of the registration
statement or in the corresponding statements made in the pro-
spectus, or shall arise out of or be based upon any omission, or
alleged omission, to state a material fact in connection with
such information furnished in writing by you to the Fund and
required to be stated in such answers or necessary to make such
information not misleading. Your agreement to indemnify the
Fund, its officers and Board members, and any such controlling
person, as aforesaid, is expressly conditioned upon your being
notified of any action brought against the Fund, its officers or
Board members, or any such controlling person, such notification
to be given by letter or telegram addressed to you at your
address set forth above within ten days after the summons or
other first legal process shall have been served. You shall
have the right to control the defense of such action, with
counsel of your own choosing, satisfactory to the Fund, if such
action is based solely upon such alleged misstatement or
omission on your part, and in any other event the Fund, its
officers or Board members, or such controlling person shall each
have the right to participate in the defense or preparation of
the defense of any such action. The failure so to notify you of
any such action shall not relieve you from any liability which
you may have to the Fund, its officers or Board members, or to
such controlling person by reason of any such untrue, or alleged
untrue, statement or omission, or alleged omission, otherwise
than on account of your indemnity agreement contained in this
paragraph 1.10. This agreement of indemnity will inure
exclusively to the Fund's benefit, to the benefit of the Fund's
officers and Board members, and their respective estates, and to
the benefit of any controlling persons and their successors.
You agree promptly to notify the Fund of the commencement of any
litigation or proceedings against you or any of your officers or
directors in connection with the issue and sale of Shares.
1.11 No Shares shall be offered by either you or the
Fund under any of the provisions of this agreement and no orders
for the purchase or sale of such Shares hereunder shall be
accepted by the Fund if and so long as the effectiveness of the
registration statement then in effect or any necessary amend-
ments thereto shall be suspended under any of the provisions of
the Securities Act of 1933, as amended, or if and so long as a
current prospectus as required by Section 10 of said Act, as
amended, is not on file with the Securities and Exchange
Commission; provided, however, that nothing contained in this
paragraph 1.11 shall in any way restrict or have an application
to or bearing upon the Fund's obligation to repurchase any
Shares from any shareholder in accordance with the provisions of
the Fund's prospectus or charter documents.
1.12 The Fund agrees to advise you immediately in
writing:
(a) of any request by the Securities and Exchange
Commission for amendments to the registration statement
or prospectus then in effect or for additional
information;
(b) in the event of the issuance by the Securities
and Exchange Commission of any stop order suspending
the effectiveness of the registration statement or pro-
spectus then in effect or the initiation of any
proceeding for that purpose;
(c) of the happening of any event which makes
untrue any statement of a material fact made in the
registration statement or prospectus then in effect or
which requires the making of a change in such registra-
tion statement or prospectus in order to make the
statements therein not misleading; and
(d) of all actions of the Securities and
Exchange Commission with respect to any amendments to
any registration statement or prospectus which may from
time to time be filed with the Securities and Exchange
Commission.
2. Offering Price
Shares of any class of the Fund offered for sale by you
shall be offered for sale at a price per share (the "offering
price") approximately equal to (a) their net asset value
(determined in the manner set forth in the Fund's charter
documents) plus (b) a sales charge, if any and except to those
persons set forth in the then-current prospectus, which shall be
the percentage of the offering price of such Shares as set forth
in the Fund's then-current prospectus. The offering price, if
not an exact multiple of one cent, shall be adjusted to the
nearest cent. In addition, Shares of any class of the Fund
offered for sale by you may be subject to a contingent deferred
sales charge as set forth in the Fund's then-current prospectus.
You shall be entitled to receive any sales charge or contingent
deferred sales charge in respect of the Shares. Any payments to
dealers shall be governed by a separate agreement between you
and such dealer and the Fund's then-current prospectus.
3. Term
This agreement shall continue until the date (the
"Reapproval Date") set forth on Exhibit A hereto (and, if the
Fund has Series, a separate Reapproval Date shall be specified
on Exhibit A for each Series), and thereafter shall continue
automatically for successive annual periods ending on the day
(the "Reapproval Day") of each year set forth on Exhibit A
hereto, provided such continuance is specifically approved at
least annually by (i) the Fund's Board or (ii) vote of a
majority (as defined in the Investment Company Act of 1940) of
the Shares of the Fund or the relevant Series, as the case may
be, provided that in either event its continuance also is
approved by a majority of the Board members who are not
"interested persons" (as defined in said Act) of any party to
this agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval. This agreement is
terminable without penalty, on 60 days' notice, by vote of
holders of a majority of the Fund's or, as to any relevant
Series, such Series' outstanding voting securities or by the
Fund's Board as to the Fund or the relevant Series, as the case
may be. This agreement is terminable by you, upon 270 days'
notice, effective on or after the fifth anniversary of the date
hereof. This agreement also will terminate automatically, as to
the Fund or relevant Series, as the case may be, in the event of
its assignment (as defined in said Act).
4. Exclusivity
So long as you act as the distributor of Shares, you
shall not perform any services for any entity other than
investment companies advised or administered by The Dreyfus
Corporation. The Fund acknowledges that the persons employed by
you to assist in the performance of your duties under this
agreement may not devote their full time to such service and
nothing contained in this agreement shall be deemed to limit or
restrict your or any of your affiliates right to engage in and
devote time and attention to other businesses or to render
services of whatever kind or nature.
Please confirm that the foregoing is in accordance with
your understanding and indicate your acceptance hereof by
signing below, whereupon it shall become a binding agreement
between us.
Very truly yours,
DREYFUS INVESTMENT GRADE BOND
FUNDS, INC.
By:
Accepted:
PREMIER MUTUAL FUND SERVICES, INC.
By:________________________
EXHIBIT A
Name of Series Reapproval Date Reapproval Day
Dreyfus Intermediate
Term Income Fund July 29, 1997 July 29th
Dreyfus Short Term
Income Fund July 29, 1995 July 29th
CUSTODY AGREEMENT
Custody Agreement made as of July 29, 1992, as amended
and restated August 24, 1995 between DREYFUS INVESTMENT GRADE BOND
FUNDS, INC., a corporation organized and existing under the laws
of the State of Maryland, having its principal office and place of
business at 200 Park Avenue, New York, New York 10166 (hereinafter
called the "Fund"), and THE BANK OF NEW YORK, a New York
corporation authorized to do a banking business, having its
principal office and place of business at 90 Washington Street,
New York, New York 10286 (hereinafter called the "Custodian").
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafter
set forth the Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the
following meanings:
1. "Authorized Person" shall be deemed to include the
Treasurer, the Controller or any other person, whether or not any
such person is an Officer or employee of the Fund, duly authorized
by the Fund's Board to give Oral Instructions and Written
Instructions on behalf of the Fund and listed in the Certificate
annexed hereto as Appendix A or such other Certificate as may be
received by the Custodian from time to time.
2. "Available Balance" shall mean for any given day
during a calendar year the aggregate amount of Federal Funds held
in the Fund's custody account(s) at The Bank of New York, or its
successors, as of the close of such day or, if such day is not a
business day, the close of the preceding business day.
3. "Bankruptcy" shall mean with respect to a party such
party's making a general assignment, arrangement or composition
with or for the benefit of its creditors, or instituting or having
instituted against it a proceeding seeking a judgment of
insolvency or bankruptcy or the entry of an order for relief under
the Federal bankruptcy law or any other relief under any
bankruptcy or insolvency law or other similar law affecting
creditors' rights, or if a petition is presented for the winding
up or liquidation of the party or a resolution is passed for its
winding up or liquidation, or it seeks, or becomes subject to, the
appointment of an administrator, receiver, trustee, custodian or
other similar official for it or for all or substantially all of
its assets or its taking any action in furtherance of, or
indicating its consent to approval of, or acquiescence in, any of
the foregoing.
4. "Book-Entry System" shall mean the Federal Reserve/
Treasury book-entry system for United States and Federal agency
securities, its successor or successors and its nominee or
nominees.
5. "Call Option" shall mean an exchange traded option
with respect to Securities other than Stock Index Options, Futures
Contracts and Futures Contract Options entitling the holder, upon
timely exercise and payment of the exercise price, as specified
therein, to purchase from the writer thereof the specified
underlying Securities.
6. "Certificate" shall mean any notice, instruction, or
other instrument in writing, authorized or required by this
Agreement to be given to the Custodian, which is actually received
by the Custodian and signed on behalf of the Fund by any two
Officers of the Fund.
7. "Clearing Member" shall mean a registered broker-
dealer which is a clearing member under the rules of O.C.C. and a
member of a national securities exchange qualified to act as a
custodian for an investment company, or any broker-dealer
reasonably believed by the Custodian to be such a clearing member.
8. "Collateral Account" shall mean a segregated account
so denominated and pledged to the Custodian as security for, and
in consideration of, the Custodian's issuance of (a) any Put
Option guarantee letter or similar document described in para-
graph 8 of Article V herein, or (b) any receipt described in
Article V or VIII herein.
9. "Consumer Price Index" shall mean the U.S. Consumer
Price Index, all items and all urban consumers, U.S. city average
1982-84 equals 100, as first published without seasonal adjustment
by the Bureau of Labor Statistics, the Department of Labor,
without regard to subsequent revisions or corrections by such
Bureau.
10. "Covered Call Option" shall mean an exchange traded
option entitling the holder, upon timely exercise and payment of
the exercise price, as specified therein, to purchase from the
writer thereof the specified Securities (excluding Futures
Contracts) which are owned by the writer thereof and subject to
appropriate restrictions.
11. "Depository" shall mean The Depository Trust
Company ("DTC"), a clearing agency registered with the Securities
and Exchange Commission, its successor or successors and its
nominee or nominees, provided the Custodian has received a
certified copy of a resolution of the Fund's Board specifically
approving deposits in DTC. The term "Depository" shall further
mean and include any other person authorized to act as a
depository under the Investment Company Act of 1940, as amended,
its successor or successors and its nominee or nominees,
specifically identified in a certified copy of a resolution of the
Fund's Board specifically approving deposits therein by the
Custodian.
12. "Earnings Credit" shall mean for any given day
during a calendar year the product of (a) the Federal Funds Rate
for such date minus .25%, and (b) 82% of the Available Balance.
13. "Federal Funds" shall mean immediately available
same day funds.
14. "Federal Funds Rate" shall mean, for any day, the
Federal Funds (Effective) interest rate so denominated as
published in Federal Reserve Statistical Release H.15 (519) and
applicable to such day and each succeeding day which is not a
business day.
15. "Financial Futures Contract" shall mean the firm
commitment to buy or sell fixed income securities, including,
without limitation, U.S. Treasury Bills, U.S. Treasury Notes, U.S.
Treasury Bonds, domestic bank certificates of deposit, and
Eurodollar certificates of deposit, during a specified month at an
agreed upon price.
16. "Futures Contract" shall mean a Financial Futures
Contract and/or Stock Index Futures Contracts.
17. "Futures Contract Option" shall mean an option with
respect to a Futures Contract.
18. "Margin Account" shall mean a segregated account in
the name of a broker, dealer, futures commission merchant or
Clearing Member, or in the name of the Fund for the benefit of a
broker, dealer, futures commission merchant or Clearing Member, or
otherwise, in accordance with an agreement between the Fund, the
Custodian and a broker, dealer, futures commission merchant or
Clearing Member (a "Margin Account Agreement"), separate and
distinct from the custody account, in which certain Securities
and/or money of the Fund shall be deposited and withdrawn from
time to time in connection with such transactions as the Fund may
from time to time determine. Securities held in the Book-Entry
System or the Depository shall be deemed to have been deposited
in, or withdrawn from, a Margin Account upon the Custodian's
effecting an appropriate entry on its books and records.
19. "Merger" shall mean with respect to a party, the
consolidation or amalgamation with, merger into, or transfer of
all or substantially all of such party's assets to, another
entity, where such party is not the surviving entity.
20. "Money Market Security" shall be deemed to include,
without limitation, debt obligations issued or guaranteed as to
principal and interest by the government of the United States or
agencies or instrumentalities thereof, commercial paper,
certificates of deposit and bankers' acceptances, repurchase and
reverse repurchase agreements with respect to the same and bank
time deposits, where the purchase and sale of such securities
ordinarily requires settlement in Federal funds on the same date
as such purchase or sale.
21. "O.C.C." shall mean Options Clearing Corporation, a
clearing agency registered under Section 17A of the Securities
Exchange Act of 1934, its successor or successors, and its nominee
or nominees.
22. "Officers" shall be deemed to include the
President, any Vice President, the Secretary, the Treasurer, the
Controller, any Assistant Secretary, any Assistant Treasurer or
any other person or persons duly authorized by the Fund's Board to
execute any Certificate, instruction, notice or other instrument
on behalf of the Fund and listed in the Certificate annexed hereto
as Appendix B or such other Certificate as may be received by the
Custodian from time to time.
23. "Option" shall mean a Call Option, Covered Call
Option, Stock Index Option and/or a Put Option.
24. "Oral Instructions" shall mean verbal instructions
actually received by the Custodian from an Authorized Person or
from a person reasonably believed by the Custodian to be an
Authorized Person.
25. "Put Option" shall mean an exchange traded option
with respect to Securities other than Stock Index Options, Futures
Contracts, and Futures Contract Options entitling the holder, upon
timely exercise and tender of the specified underlying Securities,
to sell such Securities to the writer thereof for the exercise
price.
26. "Reverse Repurchase Agreement" shall mean an
agreement pursuant to which the Fund sells Securities and agrees
to repurchase such Securities at a described or specified date and
price.
27. "Security" shall be deemed to include, without
limitation, Money Market Securities, Call Options, Put Options,
Stock Index Options, Stock Index Futures Contracts, Stock Index
Futures Contract Options, Financial Futures Contracts, Financial
Futures Contract Options, Reverse Repurchase Agreements, common
stock and other instruments or rights having characteristics
similar to common stocks, preferred stocks, debt obligations
issued by state or municipal governments and by public authorities
(including, without limitation, general obligation bonds, revenue
bonds and industrial bonds and industrial development bonds),
bonds, debentures, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments representing
rights to receive, purchase, sell or subscribe for the same, or
evidencing or representing any other rights or interest therein,
or any property or assets.
28. "Segregated Security Account" shall mean an account
maintained under the terms of this Agreement as a segregated
account, by recordation or otherwise, within the custody account
in which certain Securities and/or other assets of the Fund shall
be deposited and withdrawn from time to time in accordance with
Certificates received by the Custodian in connection with such
transactions as the Fund may from time to time determine.
29. "Series" shall mean (i) the Series of the Fund
specified on Appendix D hereto, or, where the context requires
each such Series, or (ii) if no Series are set forth on such
Appendix, the Fund.
30. "Shares" shall mean the shares of Common Stock of
the Fund, each of which, in the case of a Fund having Series, is
allocated to a particular Series.
31. "Stock Index Futures Contract" shall mean a
bilateral agreement pursuant to which the parties agree to take or
make delivery of an amount of cash equal to a specified dollar
amount times the difference between the value of a particular
stock index at the close of the last business day of the contract
and the price at which the futures contract is originally struck.
32. "Stock Index Option" shall mean an exchange traded
option entitling the holder, upon timely exercise, to receive an
amount of cash determined by reference to the difference between
the exercise price and the value of the index on the date of
exercise.
33. "Written Instructions" shall mean written
communications actually received by the Custodian from an
Authorized Person or from a person reasonably believed by the
Custodian to be an Authorized Person by telex or any other such
system whereby the receiver of such communications is able to
verify by codes or otherwise with a reasonable degree of certainty
the authenticity of the sender of such communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the
Custodian as custodian of all the Securities and moneys at any
time owned by the Fund during the period of this Agreement, except
that (a) if the Custodian fails to provide for the custody of any
of the Fund's Securities and moneys located or to be located
outside the United States in a manner satisfactory to the Fund,
the Fund shall be permitted to arrange for the custody of such
Securities and moneys located or to be located outside the United
States other than through the Custodian at rates to be negotiated
and borne by the Fund and (b) if the Custodian fails to continue
any existing sub-custodial or similar arrangements on
substantially the same terms as exist on the date of this
Agreement, the Fund shall be permitted to arrange for such or
similar services other than through the Custodian at rates to be
negotiated and borne by the Fund. The Custodian shall not charge
the Fund for any such terminated services after the date of such
termination.
2. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as hereinafter
set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of this
Article and in Article VIII, the Fund will deliver or cause to be
delivered to the Custodian all Securities and all moneys owned by
any Series, including cash received for the issuance of such
Series' shares, at any time during the period of this Agreement
and shall specify the Series, if any, to which the same are to be
specifically allocated. The Custodian will not be responsible for
such Securities and such moneys until actually received by it.
The Custodian will be entitled to reverse any credits made on a
Series' behalf where such credits have been previously made and
moneys are not finally collected. The Fund shall deliver to the
Custodian a certified resolution of the Fund's Board approving,
authorizing and instructing the Custodian on a continuous and on-
going basis to deposit in the Book-Entry System all Securities
eligible for deposit therein and to utilize the Book-Entry System
to the extent possible in connection with its performance
hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of
Securities, and deliveries and returns of Securities collateral.
Prior to a deposit of Securities of a Series in the Depository,
the Fund shall deliver to the Custodian a certified resolution of
the Fund's Board approving, authorizing and instructing the
Custodian on a continuous and on-going basis until instructed to
the contrary by a Certificate actually received by the Custodian
to deposit in the Depository all Securities eligible for deposit
therein and to utilize the Depository to the extent possible in
connection with its performance hereunder, including, without
limitation, in connection with settlements of purchases and sales
of Securities, loans of Securities, and deliveries and returns of
Securities collateral. Securities and moneys of such Series
deposited in either the Book-Entry System or the Depository will
be represented in accounts which include only assets held by the
Custodian for customers, including, but not limited to, accounts
in which the Custodian acts in a fiduciary or representative
capacity. Prior to the Custodian's accepting, utilizing and
acting with respect to Clearing Member confirmations for Options
and transactions in Options as provided in this Agreement, the
Custodian shall have received a certified resolution of the Fund's
Board approving, authorizing and instructing the Custodian on a
continuous and on-going basis, until instructed to the contrary by
a Certificate actually received by the Custodian, to accept,
utilize and act in accordance with such confirmations as provided
in this Agreement.
2. The Custodian shall credit to a separate account in
the name of the Fund for each Series all moneys received by it for
the account of the Fund, with respect to such Series. Money
credited to the separate account for a Series shall be disbursed
by the Custodian only:
(a) In payment for Securities purchased, as provided in
Article IV hereof;
(b) In payment of dividends or distributions, as
provided in Article XI hereof;
(c) In payment of original issue or other taxes, as
provided in Article XII hereof;
(d) In payment for Shares redeemed by it, as provided
in Article XII hereof;
(e) Pursuant to Certificates setting forth the name and
address of the person to whom the payment is to be made, the
Series account from which payment is to be made and the purpose
for which payment is to be made; or
(f) In payment of the fees and in reimbursement of the
expenses and liabilities of the Custodian, as provided in Article
XV hereof.
3. Promptly after the close of business on each day,
the Custodian shall furnish the Fund with confirmations and a
summary of all transfers to or from the account of each Series
during said day. Where Securities are transferred to the account
of a Series, the Custodian shall also by book-entry or otherwise
identify as belonging to such Series a quantity of Securities in a
fungible bulk of Securities registered in the name of the
Custodian (or its nominee) or shown on the Custodian's account on
the books of the Book-Entry System or the Depository. At least
monthly and from time to time, the Custodian shall furnish the
Fund with a detailed statement of the Securities and moneys held
for each Series under this Agreement.
4. Except as otherwise provided in paragraph 7 of this
Article and in Article VIII, all Securities held for a Series,
which are issued or issuable only in bearer form, except such
Securities as are held in the Book-Entry System, shall be held by
the Custodian in that form; all other Securities held for a Series
may be registered in the name of such Series, in the name of any
duly appointed registered nominee of the Custodian as the
Custodian may from time to time determine, or in the name of the
Book-Entry System or the Depository or their successor or
successors, or their nominee or nominees. The Fund agrees to
furnish to the Custodian appropriate instruments to enable the
Custodian to hold or deliver in proper form for transfer, or to
register in the name of its registered nominee or in the name of
the Book-Entry System or the Depository, any Securities which it
may hold for the account of a Series and which may from time to
time be registered in the name of such Series. The Custodian
shall hold all such Securities which are not held in the Book-
Entry System or in the Depository in a separate account in the
name of such Series physically segregated at all times from those
of any other person or persons.
5. Except as otherwise provided in this Agreement and
unless otherwise instructed to the contrary by a Certificate, the
Custodian by itself, or through the use of the Book-Entry System
or the Depository with respect to Securities therein deposited,
shall with respect to all Securities held for each Series in
accordance with this Agreement:
(a) Collect all income due or payable and, in any
event, if the Custodian receives a written notice from the Fund
specifying that an amount of income should have been received by
the Custodian within the last 90 days, the Custodian will provide
a conditional payment of income within 60 days from the date the
Custodian received such notice, unless the Custodian reasonably
concludes that such income was not due or payable to the Fund,
provided that the Custodian may reverse any such conditional
payment upon its reasonably concluding that all or any portion of
such income was not due or payable, and provided further that the
Custodian shall not be liable for failing to collect on a timely
basis the full amount of income due or payable in respect of a
"floating rate instrument" or "variable rate instrument" (as such
terms are defined under Rule 2a-7 under the Investment Company Act
of l940, as amended) if it has acted in good faith, without
negligence or willful misconduct.
(b) Present for payment and collect the amount payable
upon such Securities which are called, but only if either (i) the
Custodian receives a written notice of such call, or (ii) notice
of such call appears in one or more of the publications listed in
Appendix C annexed hereto, which may be amended at any time by the
Custodian upon five business days' prior notification to the Fund;
(c) Present for payment and collect the amount payable
upon all Securities which may mature;
(d) Surrender Securities in temporary form for
definitive Securities;
(e) Execute, as Custodian, any necessary declarations
or certificates of ownership under the Federal Income Tax Laws or
the laws or regulations of any other taxing authority now or
hereafter in effect; and
(f) Hold directly, or through the Book-Entry System or
the Depository with respect to Securities therein deposited, for
the account of each Series all rights and similar securities
issued with respect to any Securities held by the Custodian
hereunder.
6. Upon receipt of a Certificate and not otherwise, the
Custodian, directly or through the use of the Book-Entry System or
the Depository, shall:
(a) Execute and deliver to such persons as may be
designated in such Certificate proxies, consents, authorizations,
and any other instruments whereby the authority of the Fund as
owner of any Securities may be exercised;
(b) Deliver any Securities held for the Series in
exchange for other Securities or cash issued or paid in connection
with the liquidation, reorganization, refinancing, merger,
consolidation or recapitalization of any corporation, or the
exercise of any conversion privilege;
(c) Deliver any Securities held for the Series to any
protective committee, reorganization committee or other person in
connection with the reorganization, refinancing, merger,
consolidation, recapitalization or sale of assets of any
corporation, and receive and hold under the terms of this
Agreement such certificates of deposit, interim receipts or other
instruments or documents as may be issued to it to evidence such
delivery;
(d) Make such transfers or exchanges of the assets of
the Series and take such other steps as shall be stated in said
order to be for the purpose of effectuating any duly authorized
plan of liquidation, reorganization, merger, consolidation or
recapitalization of the Fund; and
(e) Present for payment and collect the amount payable
upon Securities not described in preceding paragraph 5(b) of this
Article which may be called as specified in the Certificate.
7. Notwithstanding any provision elsewhere contained
herein, the Custodian shall not be required to obtain possession
of any instrument or certificate representing any Futures
Contract, Option or Futures Contract Option until after it shall
have determined, or shall have received a Certificate from the
Fund stating, that any such instruments or certificates are
available. The Fund shall deliver to the Custodian such a
Certificate no later than the business day preceding the
availability of any such instrument or certificate. Prior to such
availability, the Custodian shall comply with Section 17(f) of the
Investment Company Act of 1940, as amended, in connection with the
purchase, sale, settlement, closing out or writing of Futures
Contracts, Options or Futures Contract Options by making payments
or deliveries specified in Certificates received by the Custodian
in connection with any such purchase, sale, writing, settlement or
closing out upon its receipt from a broker, dealer or futures
commission merchant of a statement or confirmation reasonably
believed by the Custodian to be in the form customarily used by
brokers, dealers, or futures commission merchants with respect to
such Futures Contracts, Options or Futures Contract Options, as
the case may be, confirming that such Security is held by such
broker, dealer or futures commission merchant, in book-entry form
or otherwise, in the name of the Custodian (or any nominee of the
Custodian) as custodian for the Fund, provided, however, that
payments to or deliveries from the Margin Account shall be made in
accordance with the terms and conditions of the Margin Account
Agreement. Whenever any such instruments or certificates are
available, the Custodian shall, notwithstanding any provision in
this Agreement to the contrary, make payment for any Futures
Contract, Option or Futures Contract Option for which such
instruments or such certificates are available only against the
delivery to the Custodian of such instrument or such certificate,
and deliver any Futures Contract, Option or Futures Contract
Option for which such instruments or such certificates are
available only against receipt by the Custodian of payment
therefor. Any such instrument or certificate delivered to the
Custodian shall be held by the Custodian hereunder in accordance
with, and subject to, the provisions of this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND OTHER THAN OPTIONS,
FUTURES CONTRACTS, FUTURES CONTRACT OPTIONS AND REVERSE
REPURCHASE AGREEMENTS
1. Promptly after each purchase of Securities by the
Fund, other than a purchase of any Option, Futures Contract,
Futures Contract Option or Reverse Repurchase Agreement, the Fund
shall deliver to the Custodian (i) with respect to each purchase
of Securities which are not Money Market Securities, a
Certificate, and (ii) with respect to each purchase of Money
Market Securities, a Certificate, Oral Instructions or Written
Instructions, specifying with respect to each such purchase: (a)
the Series to which the Securities purchased are to be
specifically allocated; (b) the name of the issuer and the title
of the Securities; (c) the number of shares or the principal
amount purchased and accrued interest, if any; (d) the date of
purchase and settlement; (e) the purchase price per unit; (f) the
total amount payable upon such purchase; (g) the name of the
person from whom or the broker through whom the purchase was made,
and the name of the clearing broker, if any; and (h) the name of
the broker to which payment is to be made. The Custodian shall,
upon receipt of Securities purchased by or for such Series, pay
out of the moneys held for the account of such Series the total
amount payable to the person from whom, or the broker through
whom, the purchase was made, provided that the same conforms to
the total amount payable as set forth in such Certificate, Oral
Instructions or Written Instructions.
2. Promptly after each sale of Securities by the Fund,
other than a sale of any Option, Futures Contract, Futures
Contract Option or Reverse Repurchase Agreement, the Fund shall
deliver to the Custodian (i) with respect to each sale of
Securities which are not Money Market Securities, a Certificate,
and (ii) with respect to each sale of Money Market Securities, a
Certificate, Oral Instructions or Written Instructions, specifying
with respect to each such sale: (a) the Series to which such
Securities sold were specifically allocated; (b) the name of the
issuer and the title of the Security; (c) the number of shares or
principal amount sold, and accrued interest, if any; (d) the date
of sale; (e) the sale price per unit; (f) the total amount payable
to such Series upon such sale; (g) the name of the broker through
whom or the person to whom the sale was made, and the name of the
clearing broker, if any; and (h) the name of the broker to whom
the Securities are to be delivered. The Custodian shall deliver
the Securities upon receipt of the total amount payable to the
Fund for the account of such Series upon such sale, provided that
the same conforms to the total amount payable as set forth in such
Certificate, Oral Instructions or Written Instructions. Subject
to the foregoing, the Custodian may accept payment in such form as
shall be satisfactory to it, and may deliver Securities and
arrange for payment in accordance with the customs prevailing
among dealers in Securities.
ARTICLE V
OPTIONS
1. Promptly after the purchase of any Option by the
Fund, the Fund shall deliver to the Custodian a Certificate
specifying with respect to each Option purchased: (a) the Series
to which the Option purchased is to be specifically allocated;
(b) the type of Option (put or call); (c) the name of the issuer
and the title and number of shares subject to such Option or, in
the case of a Stock Index Option, the stock index to which such
Option relates and the number of Stock Index Options purchased;
(d) the expiration date; (e) the exercise price; (f) the dates of
purchase and settlement; (g) the total amount payable by the Fund
for the account of such Series in connection with such purchase;
(h) the name of the Clearing Member through which such Option was
purchased; and (i) the name of the broker to whom payment is to be
made. The Custodian shall pay, upon receipt of a Clearing
Member's statement confirming the purchase of such Option held by
such Clearing Member for the account of the Custodian (or any duly
appointed and registered nominee of the Custodian) as custodian
for the Fund, out of moneys held for the account of such Series,
the total amount payable upon such purchase to the Clearing Member
through whom the purchase was made, provided that the same
conforms to the total amount payable as set forth in such
Certificate.
2. Promptly after the sale of any Option purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to
the Custodian a Certificate specifying with respect to each such
sale: (a) the Series to which the Option sold was specifically
allocated; (b) the type of Option (put or call); (c) the name of
the issuer and the title and number of shares subject to such
Option or, in the case of a Stock Index Option, the stock index to
which such Option relates and the number of Stock Index Options
sold; (d) the date of sale; (e) the sale price; (f) the date of
settlement; (g) the total amount payable to the Fund for the
account of such Series upon such sale; and (h) the name of the
Clearing Member through which the sale was made. The Custodian
shall consent to the delivery of the Option sold by the Clearing
Member which previously supplied the confirmation described in
preceding paragraph 1 of this Article with respect to such Option
against payment to the Custodian of the total amount payable to
the Fund for the account of such Series, provided that the same
conforms to the total amount payable as set forth in such
Certificate.
3. Promptly after the exercise by the Fund of any Call
Option purchased by the Fund pursuant to paragraph 1 hereof, the
Fund shall deliver to the Custodian a Certificate specifying with
respect to such Call Option: (a) the Series to which the Call
Option exercised was specifically allocated; (b) the name of the
issuer and the title and number of shares subject to the Call
Option; (c) the expiration date; (d) the date of exercise and
settlement; (e) the exercise price per share; (f) the total amount
to be paid by the Fund for the account of such Series upon such
exercise; and (g) the name of the Clearing Member through which
such Call Option was exercised. The Custodian shall, upon receipt
of the Securities underlying the Call Option which was exercised,
pay out of the moneys held for the account of such Series the
total amount payable to the Clearing Member through whom the Call
Option was exercised, provided that the same conforms to the total
amount payable as set forth in such Certificate.
4. Promptly after the exercise by the Fund of any Put
Option purchased by the Fund pursuant to paragraph 1 hereof, the
Fund shall deliver to the Custodian a Certificate specifying with
respect to such Put Option: (a) the Series to which the Put
Option exercised was specifically allocated; (b) the name of the
issuer and the title and number of shares subject to the Put
Option; (c) the expiration date; (d) the date of exercise and
settlement; (e) the exercise price per share; (f) the total amount
to be paid to the Fund for the account of such Series upon such
exercise; and (g) the name of the Clearing Member through which
such Put Option was exercised. The Custodian shall, upon receipt
of the amount payable upon the exercise of the Put Option, deliver
or direct the Depository to deliver the Securities, provided the
same conforms to the amount payable to the Fund for the account of
such Series as set forth in such Certificate.
5. Promptly after the exercise by the Fund of any Stock
Index Option purchased by the Fund pursuant to paragraph 1 hereof,
the Fund shall deliver to the Custodian a Certificate specifying
with respect to such Stock Index Option: (a) the Series to which
the Stock Index Option exercised was specifically allocated;
(b) the type of Stock Index Option (put or call); (c) the number
of Options being exercised; (d) the stock index to which such
Option relates; (e) the expiration date; (f) the exercise price;
(g) the total amount to be received by the Fund for the account of
such Series in connection with such exercise; and (h) the Clearing
Member from which such payment is to be received.
6. Whenever the Fund writes a Covered Call Option, the
Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Covered Call Option: (a) the
Series to which the Covered Call Option written is to be
specifically allocated; (b) the name of the issuer and the title
and number of shares for which the Covered Call Option was written
and which underlie the same; (c) the expiration date; (d) the
exercise price; (e) the premium to be received by the Fund for the
account of such Series; (f) the date such Covered Call Option was
written; and (g) the name of the Clearing Member through which the
premium is to be received. The Custodian shall deliver or cause
to be delivered, in exchange for receipt of the premium specified
in the Certificate with respect to such Covered Call Option, such
receipts as are required in accordance with the customs prevailing
among Clearing Members dealing in Covered Call Options and shall
impose, or direct the Depository to impose, upon the underlying
Securities specified in the Certificate such restrictions as may
be required by such receipts. Notwithstanding the foregoing, the
Custodian has the right, upon prior written notification to the
Fund, at any time to refuse to issue any receipts for Securities
in the possession of the Custodian and not deposited with the
Depository underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the Fund
and described in the preceding paragraph of this Article is
exercised, the Fund shall promptly deliver to the Custodian a
Certificate instructing the Custodian to deliver, or to direct the
Depository to deliver, the Securities subject to such Covered Call
Option and specifying: (a) the Series to which the Covered Call
Option exercised was specifically allocated; (b) the name of the
issuer and the title and number of shares subject to the Covered
Call Option; (c) the Clearing Member to whom the underlying
Securities are to be delivered; and (d) the total amount payable
to the Fund for the account of such Series upon such delivery.
Upon the return and/or cancellation of any receipts delivered
pursuant to paragraph 6 of this Article, the Custodian shall
deliver, or direct the Depository to deliver, the underlying
Securities as specified in the Certificate for the amount to be
received as set forth in such Certificate.
8. Whenever the Fund writes a Put Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying
with respect to such Put Option: (a) the Series to which the Put
Option written is to be specifically allocated; (b) the name of
the issuer and the title and number of shares for which the Put
Option is written and which underlie the same; (c) the expiration
date; (d) the exercise price; (e) the premium to be received by
the Fund for the account of such Series; (f) the date such Put
Option is written; (g) the name of the Clearing Member through
which the premium is to be received and to whom a Put Option
guarantee letter is to be delivered; (h) the amount of cash,
and/or the amount and kind of Securities, if any, to be deposited
in the Segregated Security Account; and (i) the amount of cash
and/or the amount and kind of Securities to be deposited into the
Collateral Account. The Custodian shall, after making the
deposits into the Collateral Account specified in the Certificate,
issue a Put Option guarantee letter substantially in the form
utilized by the Custodian on the date hereof, and deliver the same
to the Clearing Member specified in the Certificate against
receipt of the premium specified in said Certificate.
Notwithstanding the foregoing, the Custodian shall be under no
obligation to issue any Put Option guarantee letter or similar
document if it is unable to make any of the representations
contained therein.
9. Whenever a Put Option written by the Fund and
described in the preceding paragraph is exercised, the Fund shall
promptly deliver to the Custodian a Certificate specifying: (a)
the Series to which the Put Option exercised was specifically
allocated; (b) the name of the issuer and title and number of
shares subject to the Put Option; (c) the Clearing Member from
which the underlying Securities are to be received; (d) the total
amount payable by the Fund upon such delivery; (e) the amount of
cash and/or the amount and kind of Securities to be withdrawn from
the Collateral Account; and (f) the amount of cash and/or the
amount and kind of Securities, if any, to be withdrawn from the
Segregated Security Account. Upon the return and/or cancellation
of any Put Option guarantee letter or similar document issued by
the Custodian in connection with such Put Option, the Custodian
shall pay out of the moneys held for the account of such Series
the total amount payable to the Clearing Member specified in the
Certificate as set forth in such Certificate, and shall make the
withdrawals specified in such Certificate.
10. Whenever the Fund writes a Stock Index Option, the
Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Stock Index Option: (a) the
Series to which the Stock Index Option written is to be
specifically allocated; (b) whether such Stock Index Option is a
put or a call; (c) the number of Options written; (d) the stock
index to which such Option relates; (e) the expiration date;
(f) the exercise price; (g) the Clearing Member through which such
Option was written; (h) the premium to be received by the Fund for
the account of such Series; (i) the amount of cash and/or the
amount and kind of Securities, if any, to be deposited in the
Segregated Security Account; (j) the amount of cash and/or the
amount and kind of Securities, if any, to be deposited in the
Collateral Account; and (k) the amount of cash and/or the amount
and kind of Securities, if any, to be deposited in a Margin
Account, and the name in which such account is to be or has been
established. The Custodian shall, upon receipt of the premium
specified in the Certificate, make the deposits, if any, into the
Segregated Security Account specified in the Certificate, and
either (1) deliver such receipts, if any, which the Custodian has
specifically agreed to issue, which are in accordance with the
customs prevailing among Clearing Members in Stock Index Options
and make the deposits into the Collateral Account specified in the
Certificate, or (2) make the deposits into the Margin Account
specified in the Certificate.
11. Whenever a Stock Index Option written by the Fund
and described in the preceding paragraph of this Article is
exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to such Stock Index Option:
(a) the Series to which the Stock Index Option exercised was
specifically allocated; (b) such information as may be necessary
to identify the Stock Index Option being exercised; (c) the
Clearing Member through which such Stock Index Option is being
exercised; (d) the total amount payable upon such exercise, and
whether such amount is to be paid by or to the Fund for the
account of such Series; (e) the amount of cash and/or amount and
kind of Securities, if any, to be withdrawn from the Margin
Account; and (f) the amount of cash and/or amount and kind of
Securities, if any, to be withdrawn from the Segregated Security
Account and the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Collateral Account.
Upon the return and/or cancellation of the receipt, if any,
delivered pursuant to the preceding paragraph of this Article, the
Custodian shall pay to the Clearing Member specified in the
Certificate the total amount payable, if any, as specified
therein.
12. Whenever the Fund purchases any Option identical to
a previously written Option described in paragraphs 6, 8 or 10 of
this Article in a transaction expressly designated as a "Closing
Purchase Transaction" in order to liquidate its position as a
writer of an Option, the Fund shall promptly deliver to the
Custodian a Certificate specifying with respect to the Option
being purchased: (a) the Series to which the Option purchased is
to be specifically allocated; (b) that the transaction is a
Closing Purchase Transaction; (c) the name of the issuer and the
title and number of shares subject to the Option, or, in the case
of a Stock Index Option, the stock index to which such Option
relates and the number of Options held; (d) the exercise price;
(e) the premium to be paid by the Fund for the account of such
Series; (f) the expiration date; (g) the type of Option (put or
call); (h) the date of such purchase; (i) the name of the Clearing
Member to which the premium is to be paid; and (j) the amount of
cash and/or the amount and kind of Securities, if any, to be
withdrawn from the Collateral Account, a specified Margin Account
or the Segregated Security Account. Upon the Custodian's payment
of the premium and the return and/or cancellation of any receipt
issued pursuant to paragraphs 6, 8 or 10 of this Article with
respect to the Option being liquidated through the Closing
Purchase Transaction, the Custodian shall remove, or direct the
Depository to remove, the previously imposed restrictions on the
Securities underlying the Call Option.
13. Upon the expiration or exercise of, or consummation
of a Closing Purchase Transaction with respect to, any Option
purchased or written by the Fund and described in this Article,
the Custodian shall delete such Option from the statements
delivered to the Fund for the account of a Series pursuant to
paragraph 3 of Article III herein, and upon the return and/or
cancellation of any receipts issued by the Custodian, shall make
such withdrawals from the Collateral Account, the Margin Account
and/or the Segregated Security Account as may be specified in a
Certificate received in connection with such expiration, exercise,
or consummation.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures
Contract, the Fund shall deliver to the Custodian a Certificate
specifying with respect to such Futures Contract (or with respect
to any number of identical Futures Contract(s)): (a) the Series
to which the Futures Contract entered into is to be specifically
allocated; (b) the category of Futures Contract (the name of the
underlying stock index or financial instrument); (c) the number of
identical Futures Contracts entered into; (d) the delivery or
settlement date of the Futures Contract(s); (e) the date the
Futures Contract(s) was (were) entered into and the maturity date;
(f) whether the Fund is buying (going long) or selling (going
short) on such Futures Contract(s); (g) the amount of cash and/or
the amount and kind of Securities, if any, to be deposited in the
Segregated Security Account; (h) the name of the broker, dealer or
futures commission merchant through which the Futures Contract was
entered into; and (i) the amount of fee or commission, if any, to
be paid and the name of the broker, dealer or futures commission
merchant to whom such amount is to be paid. The Custodian shall
make the deposits, if any, to the Margin Account in accordance
with the terms and conditions of the Margin Account Agreement.
The Custodian shall make payment of the fee or commission, if any,
specified in the Certificate and deposit in the Segregated
Security Account the amount of cash and/or the amount and kind of
Securities specified in said Certificate.
2. (a) Any variation margin payment or similar payment
required to be made by the Fund for the account of a Series to a
broker, dealer or futures commission merchant with respect to an
outstanding Futures Contract shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account
Agreement.
(b) Any variation margin payment or similar payment
from a broker, dealer or futures commission merchant to the Fund
with respect to an outstanding Futures Contract shall be received
and dealt with by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
3. Whenever a Futures Contract held by the Custodian
hereunder is retained by the Fund until delivery or settlement is
made on such Futures Contract, the Fund shall deliver to the
Custodian a Certificate specifying: (a) the Series to which the
Futures Contract retained is to be specifically allocated; (b) the
Futures Contract; (c) with respect to a Stock Index Futures
Contract, the total cash settlement amount to be paid or received,
and with respect to a Financial Futures Contract, the Securities
and/or amount of cash to be delivered or received; (d) the broker,
dealer or futures commission merchant to or from which payment or
delivery is to be made or received; and (e) the amount of cash
and/or Securities to be withdrawn from the Segregated Security
Account. The Custodian shall make the payment or delivery
specified in the Certificate and delete such Futures Contract from
the statements delivered to the Fund pursuant to paragraph 3 of
Article III herein.
4. Whenever the Fund shall enter into a Futures
Contract to offset a Futures Contract held by the Custodian
hereunder, the Fund shall deliver to the Custodian a Certificate
specifying: (a) the Series to which the offsetting Futures
Contract is to be specifically allocated; (b) the items of
information required in a Certificate described in paragraph 1 of
this Article, and (c) the Futures Contract being offset. The
Custodian shall make payment of the fee or commission, if any,
specified in the Certificate and delete the Futures Contract being
offset from the statements delivered to the Fund for the account
of such Series pursuant to paragraph 3 of Article III herein, and
make such withdrawals from the Segregated Security Account as may
be specified in such Certificate. The withdrawals, if any, to be
made from the Margin Account shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account
Agreement.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any Futures Contract
Option by the Fund, the Fund shall deliver to the Custodian a
Certificate specifying with respect to such Futures Contract
Option: (a) the Series to which the Futures Contract Option
purchased is to be specifically allocated; (b) the type of Futures
Contract Option (put or call); (c) the type of Futures Contract
and such other information as may be necessary to identify the
Futures Contract underlying the Futures Contract Option purchased;
(d) the expiration date; (e) the exercise price; (f) the dates of
purchase and settlement; (g) the amount of premium to be paid by
the Fund for the account of such Series upon such purchase; (h)
the name of the broker or futures commission merchant through
which such option was purchased; and (i) the name of the broker or
futures commission merchant to whom payment is to be made. The
Custodian shall pay the total amount to be paid upon such purchase
to the broker or futures commission merchant through whom the
purchase was made, provided that the same conforms to the amount
set forth in such Certificate.
2. Promptly after the sale of any Futures Contract
Option purchased by the Fund pursuant to paragraph 1 hereof, the
Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to each such sale: (a) the Series to
which the Futures Contract Option sold was specifically allocated;
(b) the type of Futures Contract Option (put or call); (c) the
type of Futures Contract and such other information as may be
necessary to identify the Futures Contract underlying the Futures
Contract Option; (d) the date of sale; (e) the sale price; (f) the
date of settlement; (g) the total amount payable to the Fund for
the account of such Series upon such sale; and (h) the name of the
broker or futures commission merchant through which the sale was
made. The Custodian shall consent to the cancellation of the
Futures Contract Option being closed against payment to the
Custodian of the total amount payable to the Fund for the account
of such Series, provided the same conforms to the total amount
payable as set forth in such Certificate.
3. Whenever a Futures Contract Option purchased by the
Fund pursuant to paragraph 1 is exercised by the Fund, the Fund
shall promptly deliver to the Custodian a Certificate specifying:
(a) the Series to which the Futures Contract Option exercised was
specifically allocated; (b) the particular Futures Contract Option
(put or call) being exercised; (c) the type of Futures Contract
underlying the Futures Contract Option; (d) the date of exercise;
(e) the name of the broker or futures commission merchant through
which the Futures Contract Option is exercised; (f) the net total
amount, if any, payable by the Fund; (g) the amount, if any, to be
received by the Fund for the account of such Series; and (h) the
amount of cash and/or the amount and kind of Securities to be
deposited in the Segregated Security Account. The Custodian shall
make the payments, if any, and the deposits, if any, into the
Segregated Security Account as specified in the Certificate. The
deposits, if any, to be made to the Margin Account shall be made
by the Custodian in accordance with the terms and conditions of
the Margin Account Agreement.
4. Whenever the Fund writes a Futures Contract Option,
the Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Futures Contract Option: (a) the
Series to which the Futures Contract Option written is to be
specifically allocated; (b) the type of Futures Contract Option
(put or call); (c) the type of Futures Contract and such other
information as may be necessary to identify the Futures Contract
underlying the Futures Contract Option; (d) the expiration date;
(e) the exercise price; (f) the premium to be received by the Fund
for the account of such Series; (g) the name of the broker or
futures commission merchant through which the premium is to be
received; and (h) the amount of cash and/or the amount and kind of
Securities, if any, to be deposited in the Segregated Security
Account. The Custodian shall, upon receipt of the premium
specified in the Certificate, make the deposits into the
Segregated Security Account, if any, as specified in the
Certificate. The deposits, if any, to be made to the Margin
Account shall be made by the Custodian in accordance with the
terms and conditions of the Margin Account Agreement.
5. Whenever a Futures Contract Option written by the
Fund which is a call is exercised, the Fund shall promptly deliver
to the Custodian a Certificate specifying: (a) the Series to
which the Futures Contract Option exercised was specifically
allocated; (b) the particular Futures Contract Option exercised;
(c) the type of Futures Contract underlying the Futures Contract
Option; (d) the name of the broker or futures commission merchant
through which such Futures Contract Option was exercised; (e) the
net total amount, if any, payable to the Fund for the account of
such Series upon such exercise; (f) the net total amount, if any,
payable by the Fund for the account of such Series upon such
exercise; and (g) the amount of cash and/or the amount and kind of
Securities to be deposited in the Segregated Security Account.
The Custodian shall, upon its receipt of the net total amount
payable to the Fund for the account of such Series, if any,
specified in such Certificate make the payments, if any, and the
deposits, if any, into the Segregated Security Account as
specified in the Certificate. The deposits, if any, to be made to
the Margin Account shall be made by the Custodian in accordance
with the terms and conditions of the Margin Account Agreement.
6. Whenever a Futures Contract Option which is written
by the Fund and which is a Put Option is exercised, the Fund shall
promptly deliver to the Custodian a Certificate specifying: (a)
the Series to which the Futures Contract Option exercised was
specifically allocated; (b) the particular Futures Contract Option
exercised; (c) the type of Futures Contract underlying such
Futures Contract Option; (d) the name of the broker or futures
commission merchant through which such Futures Contract Option is
exercised; (e) the net total amount, if any, payable to the Fund
for the account of such Series upon such exercise; (f) the net
total amount, if any, payable by the Fund for the account of such
Series upon such exercise; and (g) the amount and kind of
Securities and/or cash to be withdrawn from or deposited in the
Segregated Security Account, if any. The Custodian shall, upon
its receipt of the net total amount payable to the Fund for the
account of such Series, if any, specified in the Certificate, make
the payments, if any, and the deposits, if any, into the
Segregated Security Account as specified in the Certificate. The
deposits to and/or withdrawals from the Margin Account, if any,
shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
7. Whenever the Fund purchases any Futures Contract
Option identical to a previously written Futures Contract Option
described in this Article in order to liquidate its position as a
writer of such Futures Contract Option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to
the Futures Contract Option being purchased: (a) the Series to
which the Futures Contract Option purchased is to be specifically
allocated; (b) that the transaction is a closing transaction; (c)
the type of Futures Contract and such other information as may be
necessary to identify the Futures Contract underlying the Futures
Contract Option; (d) the exercise price; (e) the premium to be
paid by the Fund for the account of such Series; (f) the
expiration date; (g) the name of the broker or futures commission
merchant to which the premium is to be paid; and (h) the amount of
cash and/or the amount and kind of Securities, if any, to be
withdrawn from the Segregated Security Account. The Custodian
shall effect the withdrawals from the Segregated Security Account
specified in the Certificate. The withdrawals, if any, to be made
from the Margin Account shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account
Agreement.
8. Upon the expiration or exercise of, or consummation
of a closing transaction with respect to, any Futures Contract
Option written or purchased by the Fund and described in this
Article, the Custodian shall (a) delete such Futures Contract
Option from the statements delivered to the Fund pursuant to para-
graph 3 of Article III herein, and (b) make such withdrawals from,
and/or, in the case of an exercise, such deposits into, the
Segregated Security Account as may be specified in a Certificate.
The deposits to and/or withdrawals from the Margin Account, if
any, shall be made by the Custodian in accordance with the terms
and conditions of the Margin Account Agreement.
9. Futures Contracts acquired by the Fund through the
exercise of a Futures Contract Option described in this Article
shall be subject to Article VI hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after any short sale, the Fund shall
deliver to the Custodian a Certificate specifying: (a) the Series
to which the short sale is to be specifically allocated; (b) the
name of the issuer and the title of the Security; (c) the number
of shares or principal amount sold, and accrued interest or
dividends, if any; (d) the dates of the sale and settlement; (e)
the sale price per unit; (f) the total amount credited to the Fund
for the account of such Series upon such sales, if any; (g) the
amount of cash and/or the amount and kind of Securities, if any,
which are to be deposited in a Margin Account and the name in
which such Margin Account has been or is to be established; (h)
the amount of cash and/or the amount and kind of Securities, if
any, to be deposited in a Segregated Security Account; and (i) the
name of the broker through which such short sale was made. The
Custodian shall upon its receipt of a statement from such broker
confirming such sale and that the total amount credited to the
Fund upon such sale, if any, as specified in the Certificate is
held by such broker for the account of the Custodian (or any
nominee of the Custodian) as custodian of the Fund, issue a
receipt or make the deposits into the Margin Account and the
Segregated Security Account specified in the Certificate.
2. In connection with the closing-out of any short
sale, the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to each such closing-out: (a)
the Series to which the short sale being closed-out was
specifically allocated; (b) the name of the issuer and the title
of the Security; (c) the number of shares or the principal amount,
and accrued interest or dividends, if any, required to effect such
closing-out to be delivered to the broker; the dates of the
closing-out and settlement; (e) the purchase price per unit; (f)
the net total amount payable to the Fund for the account of such
Series upon such closing-out; (g) the net total amount payable to
the broker upon such closing-out; (h) the amount of cash and the
amount and kind of Securities to be withdrawn, if any, from the
Margin Account; (i) the amount of cash and/or the amount and kind
of Securities, if any, to be withdrawn from the Segregated
Security Account; and (j) the name of the broker through which the
Fund is effecting such closing-out. The Custodian shall, upon
receipt of the net total amount payable to the Fund for the
account of such Series upon such closing-out and the return and/or
cancellation of the receipts, if any, issued by the custodian with
respect to the short sale being closed-out, pay out of the moneys
held for the account of the Series to the broker the net total
amount payable to the broker, and make the withdrawals from the
Margin Account and the Segregated Security Account, as the same
are specified in the Certificate.
ARTICLE IX
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund, on behalf of a Series,
enters into a Reverse Repurchase Agreement with respect to
Securities and money held by the Custodian hereunder, the Fund
shall deliver to the Custodian a Certificate or in the event such
Reverse Repurchase Agreement is a Money Market Security, a
Certificate, Oral Instructions or Written Instructions specifying:
(a) the Series to which the Reverse Repurchase Agreement is to be
specifically allocated; (b) the total amount payable to the Fund
for the account of such Series in connection with such Reverse
Repurchase Agreement; (c) the broker or dealer through or with
which the Reverse Repurchase Agreement is entered; (d) the amount
and kind of Securities to be delivered by the Fund to such broker
or dealer; (e) the date of such Reverse Repurchase Agreement; and
(f) the amount of cash and/or the amount and kind of Securities,
if any, to be deposited in a Segregated Security Account in
connection with such Reverse Repurchase Agreement. The Custodian
shall, upon receipt of the total amount payable to the Fund
specified in the Certificate, Oral Instructions or Written
Instructions make the delivery to the broker or dealer, and the
deposits, if any, to the Segregated Security Account, specified in
such Certificate, Oral Instructions or Written Instructions.
2. Upon the termination of a Reverse Repurchase
Agreement described in paragraph 1 of this Article, the Fund shall
promptly deliver a Certificate or, in the event such Reverse
Repurchase Agreement is a Money Market Security, a Certificate,
Oral Instructions or Written Instructions to the Custodian
specifying: (a) the Series to which the Reverse Repurchase
Agreement terminated was specifically allocated; (b) the Reverse
Repurchase Agreement being terminated; (c) the total amount
payable by the Fund for the account of such Series in connection
with such termination; (d) the amount and kind of Securities to be
received by the Fund for the account of such Series in connection
with such termination; (e) the date of termination; (f) the name
of the broker or dealer with or through which the Reverse
Repurchase Agreement is to be terminated; and (g) the amount of
cash and/or the amount and kind of Securities to be withdrawn from
the Segregated Security Account. The Custodian shall, upon
receipt of the amount and kind of Securities to be received by the
Fund specified in the Certificate, Oral Instructions or Written
Instructions, make the payment to the broker or dealer, and the
withdrawals, if any, from the Segregated Security Account,
specified in such Certificate, Oral Instructions or Written
Instructions.
ARTICLE X
CONCERNING MARGIN ACCOUNTS, SEGREGATED SECURITY
ACCOUNTS AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such
deposits to, or withdrawals from, a Segregated Security Account as
specified in a Certificate received by the Custodian. Such
Certificate shall specify the amount of cash and/or the amount and
kind of Securities to be deposited in, or withdrawn from, the
Segregated Security Account. In the event that the Fund fails to
specify in a Certificate the designated Series, the name of the
issuer, the title and the number of shares or the principal amount
of any particular Securities to be deposited by the Custodian
into, or withdrawn from, a Segregated Securities Account, the
Custodian shall be under no obligation to make any such deposit or
withdrawal and shall so notify the Fund.
2. The Custodian shall make deliveries or payments from
a Margin Account to the broker, dealer, futures commission
merchant or Clearing Member in whose name, or for whose benefit,
the account was established as specified in the Margin Account
Agreement.
3. Amounts received by the Custodian as payments or
distributions with respect to Securities deposited in any Margin
Account shall be dealt with in accordance with the terms and
conditions of the Margin Account Agreement.
4. The Custodian shall have a continuing lien and
security interest in and to any property at any time held by the
Custodian in any Collateral Account described herein. In
accordance with applicable law, the Custodian may enforce its lien
and realize on any such property whenever the Custodian has made
payment or delivery pursuant to any Put Option guarantee letter or
similar document or any receipt issued hereunder by the Custodian.
In the event the Custodian should realize on any such property net
proceeds which are less than the Custodian's obligations under any
Put Option guarantee letter or similar document or any receipt,
such deficiency shall be a debt owed the Custodian by the Fund
within the scope of Article XIII herein.
5. On each business day, the Custodian shall furnish
the Fund with respect to each Series a statement with respect to
each Margin Account in which money or Securities are held
specifying as of the close of business on the previous business
day: (a) the name of the Margin Account; (b) the amount and kind
of Securities held therein; and (c) the amount of money held
therein. The Custodian shall make available upon request to any
broker, dealer or futures commission merchant specified in the
name of a Margin Account a copy of the statement furnished the
Fund with respect to such Margin Account.
6. Promptly after the close of business on each
business day in which cash and/or Securities are maintained in a
Collateral Account, the Custodian shall furnish the Fund with a
Statement with respect to such Collateral Account specifying the
amount of cash and/or the amount and kind of Securities held
therein. No later than the close of business next succeeding the
delivery to the Fund of such statement, the Fund shall furnish to
the Custodian a Certificate or Written Instructions specifying the
then market value of the securities described in such statement.
In the event such then market value is indicated to be less than
the Custodian's obligation with respect to any outstanding Put
Option, guarantee letter or similar document, the Fund shall
promptly specify in a Certificate the additional cash and/or
Securities to be deposited in such Collateral Account to eliminate
such deficiency.
ARTICLE XI
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. For each Series, the Fund shall furnish to the
Custodian a copy of the resolution of the Fund's Board, certified
by the Secretary or any Assistant Secretary, either (i) setting
forth the date of the declaration of a dividend or distribution,
the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the amount
payable per share to the shareholders of record as of that date
and the total amount payable to the Dividend Agent of the Fund on
the payment date, or (ii) authorizing the declaration of dividends
and distributions on a daily basis and authorizing the Custodian
to rely on Oral Instructions, Written Instructions or a
Certificate setting forth the date of the declaration of such
dividend or distribution, the date of payment thereof, the record
date as of which shareholders entitled to payment shall be
determined, the amount payable per share to the shareholders of
record as of that date and the total amount payable to the
Dividend Agent on the payment date.
2. Upon the payment date specified in such resolution,
Oral Instructions, Written Instructions or Certificate, as the
case may be, the Custodian shall pay out of the moneys held for
the account of the Series the total amount payable to the Dividend
Agent of the Fund.
ARTICLE XII
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Series' Shares, the
Fund shall deliver to the Custodian a Certificate duly specifying:
(a) The number of Shares sold, trade date, and price;
and
(b) The amount of money to be received by the Custodian
for the sale of such Shares.
2. Upon receipt of such money from the Transfer Agent,
the Custodian shall credit such money to the account of such
Series.
3. Upon issuance of any Series' Shares in accordance
with the foregoing provisions of this Article, the Custodian shall
pay, out of the money held for the account of such Series, all
original issue or other taxes required to be paid by the Fund for
the account of such Series in connection with such issuance upon
the receipt of a Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund
shall hereafter redeem any Series' Shares, the Fund shall furnish
to the Custodian a Certificate specifying:
(a) The number of Shares redeemed; and
(b) The amount to be paid for the Shares redeemed.
5. Upon receipt from the Transfer Agent of an advice
setting forth the number of a Series' Shares received by the
Transfer Agent for redemption and that such Shares are valid and
in good form for redemption, the Custodian shall make payment to
the Transfer Agent out of the moneys held for the account of such
Series of the total amount specified in the Certificate issued
pursuant to the foregoing paragraph 4 of this Article.
6. Notwithstanding the above provisions regarding the
redemption of any of Series' Shares, whenever a Series' Shares are
redeemed pursuant to any check redemption privilege which may from
time to time be offered by the Fund, the Custodian, unless
otherwise instructed by a Certificate, shall, upon receipt of an
advice from the Fund or its agent setting forth that the
redemption is in good form for redemption in accordance with the
check redemption procedure, honor the check presented as part of
such check redemption privilege out of the money held in the
account of the Fund for such purposes.
ARTICLE XIII
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion
advance funds on behalf of a Series which results in an overdraft
because the moneys held by the Custodian for the account of such
Series shall be insufficient to pay the total amount payable upon
a purchase of Securities as set forth in a Certificate or Oral
Instructions issued pursuant to Article IV, or which results in an
overdraft in the account for such Series for some other reason, or
if a Series is for any other reason indebted to the Custodian
(except a borrowing for investment or for temporary or emergency
purposes using Securities as collateral pursuant to a separate
agreement and subject to the provisions of paragraph 2 of this
Article XIII), such overdraft or indebtedness shall be deemed to
be a loan made by the Custodian to such Series payable on demand
and shall bear interest from the date incurred at a rate per annum
(based on a 360-day year for the actual number of days involved)
equal to the Federal Funds Rate plus l/2%, such rate to be
adjusted on the effective date of any change in such Federal Funds
Rate but in no event to be less than 6% per annum, except that any
overdraft resulting from an error by the Custodian shall bear no
interest. Any such overdraft or indebtedness shall be reduced by
an amount equal to the total of all amounts due such Series which
have not been collected by the Custodian on behalf of such Series
when due because of the failure of the Custodian to make timely
demand or presentment for payment. In addition, the Fund hereby
agrees that the Custodian shall have a continuing lien and
security interest in and to any property at any time held by it
for the benefit of such Series or in which such Series may have an
interest which is then in the Custodian's possession or control or
in possession or control of any third party acting in the
Custodian's behalf. The Fund authorizes the Custodian, in its
sole discretion, at any time to charge any such overdraft or
indebtedness together with interest due thereon against any
balance of account standing to such Series' credit on the
Custodian's books. For purposes of this Section 1 of
Article XIII, "overdraft" shall mean a negative Available Balance.
2. The Fund will cause to be delivered to the Custodian
by any bank (including, if the borrowing is pursuant to a separate
agreement, the Custodian) from which it borrows money for
investment or for temporary or emergency purposes using Securities
in a Series' portfolio as collateral for such borrowings, a notice
or undertaking in the form currently employed by any such bank
setting forth the amount which such bank will loan to the Fund
against delivery of a stated amount of collateral. The Fund shall
promptly deliver to the Custodian a Certificate specifying with
respect to each such borrowing: (a) the Series to which the
borrowing relates; (b) the name of the bank; (c) the amount and
terms of the borrowing, which may be set forth by incorporating by
reference an attached promissory note, duly endorsed by the Fund,
or other loan agreement; (d) the time and date, if known, on which
the loan is to be entered into; (e) the date on which the loan
becomes due and payable; (f) the total amount payable to the Fund
for the account of such Series on the borrowing date; (g) the
market value of Securities to be delivered as collateral for such
loan, including the name of the issuer, the title and the number
of shares or the principal amount of any particular Securities;
and (h) a statement specifying whether such loan is for investment
purposes or for temporary or emergency purposes and that such loan
is in conformance with the Investment Company Act of 1940, as
amended, and the Fund's prospectus. The Custodian shall deliver
on the borrowing date specified in a Certificate the specified
collateral and the executed promissory note, if any, against
delivery by the lending bank of the total amount of the loan
payable, provided that the same conforms to the total amount
payable as set forth in the Certificate. The Custodian may, at
the option of the lending bank, keep such collateral in its
possession, but such collateral shall be subject to all rights
therein given the lending bank by virtue of any promissory note or
loan agreement. The Custodian shall deliver such Securities as
additional collateral as may be specified in a Certificate to
collateralize further any transaction described in this paragraph.
The Fund shall cause all Securities released from collateral
status to be returned directly to the Custodian, and the Custodian
shall receive from time to time such return of collateral as may
be tendered to it. In the event that the Fund fails to specify in
a Certificate the Series, the name of the issuer, the title and
number of shares or the principal amount of any particular
Securities to be delivered as collateral by the Custodian, the
Custodian shall not be under any obligation to deliver any
Securities.
ARTICLE XIV
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. If the Fund is permitted by the terms of its
organization documents and as disclosed in its most recent and
currently effective prospectus to lend the portfolio Securities of
a Series, within 24 hours after each loan of portfolio Securities
the Fund shall deliver or cause to be delivered to the Custodian a
Certificate specifying with respect to each such loan: (a) the
Series to which the Securities to be loaned are specifically
allocated; (b) the name of the issuer and the title of the
Securities; (c) the number of shares or the principal amount
loaned; (d) the date of loan and delivery; (e) the total amount to
be delivered to the Custodian against the loan of the Securities,
including the amount of cash collateral and the premium, if any,
separately identified; and (f) the name of the broker, dealer or
financial institution to which the loan was made. The Custodian
shall deliver the Securities thus designated to the broker, dealer
or financial institution to which the loan was made upon receipt
of the total amount designated as to be delivered against the loan
of Securities. The Custodian may accept payment in connection
with a delivery otherwise than through the Book-Entry System or
Depository only in the form of a certified or bank cashier's check
payable to the order of the Fund or the Custodian drawn on New
York Clearing House funds and may deliver Securities in accordance
with the customs prevailing among dealers in securities.
2. Promptly after each termination of the loan of
Securities by the Fund, the Fund shall deliver or cause to be
delivered to the Custodian a Certificate specifying with respect
to each such loan termination and return of Securities: (a) the
Series to which the Securities to be returned are specifically
allocated; (b) the name of the issuer and the title of the
Securities to be returned; (c) the number of shares or the
principal amount to be returned; (d) the date of termination; (e)
the total amount to be delivered by the Custodian (including the
cash collateral for such Securities minus any offsetting credits
as described in said Certificate); and (f) the name of the broker,
dealer or financial institution from which the Securities will be
returned. The Custodian shall receive all Securities returned
from the broker, dealer, or financial institution to which such
Securities were loaned and upon receipt thereof shall pay, out of
the moneys held for the account of the Series specified in the
Certificate, the total amount payable upon such return of
Securities as set forth in the Certificate.
ARTICLE XV
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, neither the
Custodian nor its nominee shall be liable for any loss or damage,
including counsel fees, resulting from its action or omission to
act or otherwise, either hereunder or under any Margin Account
Agreement, except for any such loss or damage arising out of its
own negligence or willful misconduct. The Custodian may, with
respect to questions of law arising hereunder or under any Margin
Account Agreement, apply for and obtain the advice and opinion of
counsel to the Fund or of its own counsel, at the expense of the
Fund, and shall be fully protected with respect to anything done
or omitted by it in good faith in conformity with such advice or
opinion. The Custodian shall be liable to the Fund for any loss
or damage resulting from the use of the Book-Entry System or any
Depository arising by reason of any negligence, misfeasance or
willful misconduct on the part of the Custodian or any of its
employees or agents.
2. Without limiting the generality of the foregoing,
the Custodian shall be under no obligation to inquire into, and
shall not be liable for:
(a) The validity of the issue of any Securities
purchased, sold or written by or for the Fund, the legality of the
purchase, sale or writing thereof, or the propriety of the amount
paid or received therefor;
(b) The legality of the issue or sale of any of the
Fund's Shares, or the sufficiency of the amount to be received
therefor;
(c) The legality of the redemption of any of the Fund's
Shares, or the propriety of the amount to be paid therefor;
(d) The legality of the declaration or payment of any
dividend by the Fund;
(e) The legality of any borrowing by the Fund using
Securities as collateral;
(f) The legality of any loan of portfolio Securities
pursuant to Article XIV of this Agreement, nor shall the Custodian
be under any duty or obligation to see to it that any cash
collateral delivered to it by a broker, dealer or financial
institution or held by it at any time as a result of such loan of
portfolio Securities of the Fund is adequate collateral for the
Fund against any loss it might sustain as a result of such loan.
The Custodian specifically, but not by way of limitation, shall
not be under any duty or obligation periodically to check or
notify the Fund that the amount of such cash collateral held by it
for the Fund is sufficient collateral for the Fund, but such duty
or obligation shall be the sole responsibility of the Fund. In
addition, the Custodian shall be under no duty or obligation to
see that any broker, dealer or financial institution to which
portfolio Securities of the Fund are lent pursuant to Article XIV
of this Agreement makes payment to it of any dividends or interest
which are payable to or for the account of the applicable Series
of the Fund during the period of such loan or at the termination
of such loan, provided, however, that the Custodian shall promptly
notify the Fund in the event that such dividends or interest are
not paid and received when due; or
(g) The sufficiency or value of any amounts of money
and/or Securities held in any Margin Account, Segregated Security
Account or Collateral Account in connection with transactions by
the Fund. In addition, the Custodian shall be under no duty or
obligation to see that any broker, dealer, futures commission
merchant or Clearing Member makes payment to the Fund of any
variation margin payment or similar payment which the Fund may be
entitled to receive from such broker, dealer, futures commission
merchant or Clearing Member, to see that any payment received by
the Custodian from any broker, dealer, futures commission merchant
or Clearing Member is the amount the Fund is entitled to receive,
or to notify the Fund of the Custodian's receipt or non-receipt of
any such payment; provided however that the Custodian, upon the
Fund's written request, shall, as Custodian, demand from any
broker, dealer, futures commission merchant or Clearing Member
identified by the Fund the payment of any variation margin payment
or similar payment that the Fund asserts it is entitled to receive
pursuant to the terms of a Margin Account Agreement or otherwise
from such broker, dealer, futures commission merchant or Clearing
Member.
3. The Custodian shall not be liable for, or considered
to be the Custodian of, any money, whether or not represented by
any check, draft or other instrument for the payment of money,
received by it on behalf of the Fund until the Custodian actually
receives and collects such money directly or by the final
crediting of the account representing the Fund's interest at the
Book-Entry System or the Depository.
4. The Custodian shall have no responsibility and shall
not be liable for ascertaining or acting upon any calls,
conversions, exchange, offers, tenders, interest rate changes or
similar matters relating to Securities held in the Depository,
unless the Custodian shall have actually received timely notice
from the Depository. In no event shall the Custodian have any
responsibility or liability for the failure of the Depository to
collect, or for the late collection or late crediting by the
Depository of any amount payable upon Securities deposited in the
Depository which may mature or be redeemed, retired, called or
otherwise become payable. However, upon receipt of a Certificate
from the Fund of an overdue amount on Securities held in the
Depository, the Custodian shall make a claim against the
Depository on behalf of the Fund, except that the Custodian shall
not be under any obligation to appear in, prosecute or defend any
action, suit or proceeding in respect to any Securities held by
the Depository which in its opinion may involve it in expense or
liability, unless indemnity satisfactory to it against all expense
and liability be furnished as often as may be required.
5. The Custodian shall not be under any duty or
obligation to take action to effect collection of any amount due
to the Fund from the Transfer Agent of the Fund nor to take any
action to effect payment or distribution by the Transfer Agent of
the Fund of any amount paid by the Custodian to the Transfer Agent
of the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or
obligation to take action to effect collection of any amount, if
the Securities upon which such amount is payable are in default,
or if payment is refused after due demand or presentation, unless
and until (i) it shall be directed to take such action by a
Certificate and (ii) it shall be assured to its satisfaction of
reimbursement of its costs and expenses in connection with any
such action.
7. The Custodian may appoint one or more banking
institutions as Depository or Depositories or as Sub-Custodian or
Sub-Custodians, including, but not limited to, banking
institutions located in foreign countries, of Securities and
moneys at any time owned by the Fund, upon terms and conditions
approved in the Certificate, which shall, if requested by the
Custodian, be accompanied by an approving resolution of the Fund's
Board adopted in accordance with Rule 17f-5 under the Investment
Company Act of 1940, as amended. Notwithstanding anything to the
contrary contained in this Agreement, the Custodian shall hold
harmless and indemnify the Fund from and against any losses,
actions, claims, demands, expenses and proceedings, including
counsel fees, that occur as a result of any act or omission of any
Foreign Sub-Custodian or Depository with respect to the
safekeeping of moneys and securities of the Fund.
8. The Custodian shall not be under any duty or
obligation to ascertain whether any Securities at any time
delivered to or held by it for the account of the Fund are such as
properly may be held by the Fund under the provisions of its
organization documents.
9. (a) The Custodian shall be entitled to receive and
the Fund agrees to pay to the Custodian all reasonable out-of-
pocket expenses and such compensation and fees as are specified on
Schedule A hereto. The Custodian shall not deem amounts payable
in respect of foreign custodial services to be out-of-pocket
expenses, it being the parties' intention that all fees for such
services shall be as set forth on Schedule B hereto and shall be
provided for the term of this Agreement without any automatic or
unilateral increase. The Custodian shall have the right to
unilaterally increase the figures on Schedule A on or after
March 1, 1996 and on or after each succeeding March 1 thereafter
by an amount equal to 50% of the increase in the Consumer Price
Index for the calendar year ending on the December 31 immediately
preceding the calendar year in which such March 1 occurs,
provided, however, that during each such annual period commencing
on a March 1, the aggregate increase during such period shall not
be in excess of 10%. Any increase by the Custodian shall be
specified in a written notice delivered to the Fund at least
thirty days prior to the effective date of the increase. The
Custodian may charge such compensation and any expenses incurred
by the Custodian in the performance of its duties pursuant to such
agreement against any money held by it for the account of the
Fund. The Custodian shall also be entitled to charge against any
money held by it for the account of the Fund the amount of any
loss, damage, liability or expense, including counsel fees, for
which it shall be entitled to reimbursement under the provisions
of this Agreement. The expenses which the Custodian may charge
against the account of the Fund include, but are not limited to,
the expenses of Sub-Custodians and foreign branches of the
Custodian incurred in settling outside of New York City
transactions involving the purchase and sale of Securities of the
Fund.
(b) The Fund shall receive a credit for each
calendar month against such compensation and fees of the Custodian
as may be payable by the Fund with respect to such calendar month
in an amount equal to the aggregate of its Earnings Credit for
such calendar month. In no event may any Earnings Credits be
carried forward to any fiscal year other than the fiscal year in
which it was earned, or, unless permitted by applicable law,
transferred to, or utilized by, any other person or entity,
provided that any such transferred Earnings Credit can be used
only to offset compensation and fees of the Custodian for services
rendered to such transferee and cannot be used to pay the
Custodian's out-of-pocket expenses. For purposes of this sub-
section (b), the Fund is permitted to transfer Earnings Credits
only to The Dreyfus Corporation, its affiliates and/or any
investment company now or in the future for which The Dreyfus
Corporation or any of its affiliates acts as the sole investment
adviser. For purposes of this sub-section (b), a fiscal year
shall mean the twelve-month period commencing on the effective
date of this Agreement and on each anniversary thereof.
10. The Custodian shall be entitled to rely upon any
Certificate, notice or other instrument in writing received by the
Custodian and reasonably believed by the Custodian to be a
Certificate. The Custodian shall be entitled to rely upon any
Oral Instructions and any Written Instructions actually received
by the Custodian pursuant to Article IV or XI hereof. The Fund
agrees to forward to the Custodian a Certificate or facsimile
thereof, confirming such Oral Instructions or Written Instructions
in such manner so that such Certificate or facsimile thereof is
received by the Custodian, whether by hand delivery, telex or
otherwise, by the close of business of the same day that such Oral
Instructions or Written Instructions are given to the Custodian.
The Fund agrees that the fact that such confirming instructions
are not received by the Custodian shall in no way affect the
validity of the transactions or enforceability of the transactions
hereby authorized by the Fund. The Fund agrees that the Custodian
shall incur no liability to the Fund in acting upon Oral
Instructions given to the Custodian hereunder concerning such
transactions, provided such instructions reasonably appear to have
been received from an Authorized Person.
11. The Custodian shall be entitled to rely upon any
instrument, instruction or notice received by the Custodian and
reasonably believed by the Custodian to be given in accordance
with the terms and conditions of any Margin Account Agreement.
Without limiting the generality of the foregoing, the Custodian
shall be under no duty to inquire into, and shall not be liable
for, the accuracy of any statements or representations contained
in any such instrument or other notice including, without
limitation, any specification of any amount to be paid to a
broker, dealer, futures commission merchant or Clearing Member.
12. The books and records pertaining to the Fund which
are in the possession of the Custodian shall be the property of
the Fund. Such books and records shall be prepared and maintained
as required by the Investment Company Act of 1940, as amended, and
other applicable securities laws and rules and regulations. The
Fund, or the Fund's authorized representatives, shall have access
to such books and records during the Custodian's normal business
hours. Upon the reasonable request of the Fund, copies of any
such books and records shall be provided by the Custodian to the
Fund or the Fund's authorized representative at the Fund's
expense.
13. The Custodian shall provide the Fund with any
report obtained by the Custodian on the system of internal
accounting control of the Book-Entry System or the Depository, or
O.C.C., and with such reports on its own systems of internal
accounting control as the Fund may reasonably request from time to
time.
14. The Fund agrees to indemnify the Custodian against
and save the Custodian harmless from all liability, claims, losses
and demands whatsoever, including attorney's fees, howsoever
arising or incurred because of or in connection with the
Custodian's payment or non-payment of checks pursuant to paragraph
6 of Article XII as part of any check redemption privilege program
of the Fund, except for any such liability, claim, loss and demand
arising out of the Custodian's own negligence or willful
misconduct.
15. Subject to the foregoing provisions of this
Agreement, the Custodian may deliver and receive Securities, and
receipts with respect to such Securities, and arrange for payments
to be made and received by the Custodian in accordance with the
customs prevailing from time to time among brokers or dealers in
such Securities.
16. The Custodian shall have no duties or responsi-
bilities whatsoever except such duties and responsibilities as are
specifically set forth in this Agreement, and no covenant or
obligation shall be implied in this Agreement against the
Custodian.
ARTICLE XVI
TERMINATION
1. (a) Any termination may be effected only by the
terminating party giving to the other party a notice in writing
specifying the date of such termination, which shall be not less
than two hundred seventy (270) days after the date of giving of
such notice.
(b) The Fund may at any time terminate this
Agreement if the Custodian has materially breached its obligations
under this Agreement and such breach has remained uncured for a
period of thirty days after the Custodian's receipt from the Fund
of written notice specifying such breach.
(c) Either party, immediately upon written notice
to the other party, may terminate this Agreement upon the Merger
or Bankruptcy of the other party.
(d) The Fund may at any time terminate this
Agreement if the Custodian has materially breached its obligations
under the "Amendment to Transfer Agency Agreements" dated August
18, 1989 and has not cured such breach as promptly as practicable
and in any event within seven days of its receipt of written
notice of such breach, provided that the Custodian shall not be
permitted to cure any such material breach arising from the
willful misconduct of the Custodian.
In the event notice of termination is given by the Fund,
it shall be accompanied by a copy of a resolution of the Fund's
Board, certified by the Secretary or any Assistant Secretary,
electing to terminate this Agreement and designating a successor
custodian or custodians, each of which shall be a bank or trust
company having not less than $2,000,000 aggregate capital, surplus
and undivided profits. In the event notice of termination is
given by the Custodian, the Fund shall, on or before the
termination date, deliver to the Custodian a copy of a resolution
of its Board, certified by the Secretary or any Assistant
Secretary, designating a successor custodian or custodians. In
the absence of such designation by the Fund, the Custodian may
designate a successor custodian which shall be a bank or trust
company having not less than $2,000,000 aggregate capital, surplus
and undivided profits. Upon the date set forth in such notice,
this Agreement shall terminate and the Custodian shall, upon
receipt of a notice of acceptance by the successor custodian, on
that date deliver directly to the successor custodian all
Securities and moneys then owned by the Fund and held by it as
Custodian, after deducting all fees, expenses and other amounts
for the payment or reimbursement of which it shall then be
entitled.
2. If a successor custodian is not designated by the
Fund or the Custodian in accordance with the preceding paragraph,
the Fund shall, upon the date specified in the notice of
termination of this Agreement and upon the delivery by the
Custodian of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and
moneys then owned by the Fund, be deemed to be its own custodian,
and the Custodian shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement, other than the duty
with respect to Securities held in the Book-Entry System, in any
Depository or by a Clearing Member which cannot be delivered to
the Fund, to hold such Securities hereunder in accordance with
this Agreement.
ARTICLE XVII
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate
setting forth the names of the present Authorized Persons. The
Fund agrees to furnish to the Custodian a new Certificate in
similar form in the event that any such present Authorized Person
ceases to be an Authorized Person or in the event that other or
additional Authorized Persons are elected or appointed. Until
such new Certificate shall be received, the Custodian shall be
fully protected in acting under the provisions of this Agreement
upon Oral Instructions or signatures of the present Authorized
Persons as set forth in the last delivered Certificate.
2. Annexed hereto as Appendix B is a Certificate signed
by two of the present Officers of the Fund setting forth the names
of the present Officers of the Fund. The Fund agrees to furnish
to the Custodian a new Certificate in similar form in the event
any such present Officer ceases to be an Officer of the Fund, or
in the event that other or additional Officers are elected or
appointed. Until such new Certificate shall be received, the
Custodian shall be fully protected in acting under the provisions
of this Agreement upon the signatures of the Officers as set forth
in the last delivered Certificate.
3. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the
Custodian, shall be sufficiently given if addressed to the
Custodian and mailed or delivered to it at its offices at 90
Washington Street, 13th Floor, New York, New York 10286, or at
such other place as the Custodian may from time to time designate
in writing.
4. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Fund,
shall be sufficiently given if addressed to the Fund and mailed or
delivered to it at its offices at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or at such other place as the Fund
may from time to time designate in writing.
5. This Agreement may not be amended or modified in any
manner except by a written agreement executed by both parties with
the same formality as this Agreement and approved by a resolution
of the Fund's Board.
6. This Agreement shall extend to and shall be binding
upon the parties hereto, and their respective successors and
assigns; provided, however, that this Agreement shall not be
assignable by the Fund without the written consent of the
Custodian, or by the Custodian without the written consent of the
Fund, authorized or approved by a resolution of its Board.
7. This Agreement shall be construed in accordance with
the laws of the State of New York.
8. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but
such counterparts shall, together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers, thereunto
duly authorized, as of the day and year first above written.
DREYFUS INVESTMENT GRADE BOND
FUNDS, INC.
By:
Attest:
THE BANK OF NEW YORK
By:
Attest:
Appendix A
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
AUTHORIZED SIGNATORIES:
CASH ACCOUNT AND/OR CUSTODIAN ACCOUNT
FOR PORTFOLIO SECURITIES TRANSACTIONS
Group I Group II
Frank Greene, Phyllis Paul R. Casti, Jr.
Meiner, Paul R. Casti, Jr., Jeffrey N. Nachman Thomas J. Durante
Thomas J. Durante, Jean Philip L. Toia James M. Windels
Farley, Gregory S. Gruber, Lawrence S. Kash Paul T. Molloy
Paul T. Molloy, Jeffrey N. Joseph I. Connolly Jean Farley
Nachman, James M. Windels, Gregory S. Gruber
Anna Mancini and Mary
Kate Macchia
Cash Account
1. Fees payable to The Bank of New York pursuant to written
agreement with the Fund for services rendered in its capacity
as Custodian or agent of the Fund, or to The Shareholder
Services Group, Inc. in its capacity as Transfer Agent or agent
of the Fund:
Two (2) signatures required, one of which must be from
Group II, except that no individual shall be authorized to
sign more than once.
2. Other expenses of the Fund, $5,000 and under:
Any combination of two (2) signatures from either Group I
or Group II, or both such Groups, except that no
individual shall be authorized to sign more than once.
3. Other expenses of the Fund, over $5,000 but not over $25,000:
Two (2) signatures required, one of which must be from
Group II, except that no individual shall be authorized to
sign more than once.
4. Other expenses of the Fund, over $25,000:
Two (2) signatures required, one from Group I or Group II,
including any one of the following: Paul R. Casti, Jr.,
James M. Windels, Jeffrey N. Nachman, Joseph I. Connolly
or Philip Toia, except that no individual shall be
authorized to sign more than once.
Custodian Account for Portfolio Securities Transactions
Two (2) signatures required from any of the following:
Joseph I. Connolly, Philip L. Toia, Paul R. Casti,
Jr., Thomas J. Durante, Jean Farley, Gregory S.
Gruber, Paul T. Molloy, Jeffrey N. Nachman, James M.
Windels, Mary Kate Macchia, Robert Salviolo, Katya
Jiminez, Paul Goerke, Christine O'Hara and Anna
Mancini.
Appendix B
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
The undersigned Officers of the Fund do hereby certify
that the following individuals, whose specimen signatures are on
file with The Bank of New York, have been duly elected or appointed
by the Fund's Board to the position set forth opposite their names
and have qualified therefor:
Name Position
Marie E. Connolly President and Treasurer
John E. Pelletier Vice President and Secretary
Frederick C. Dey Vice President and Assistant
Treasurer
Elizabeth Bachman Vice President and Assistant
Secretary
Eric B. Fischman Vice President and Assistant
Secretary
John F. Tower, III Assistant Treasurer
John J. Pyburn Assistant Treasurer
Margaret Pardo Assistant Secretary
Garitt Kono Portfolio Manager
Gerald E. Thunelius Portfolio Manager
Eric B. Fischman, Margaret Pardo,
Vice President Assistant Secretary
Appendix C
The following are designated publications for purposes of
paragraph 5(b) of Article III:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
The New York Times
Standard & Poor's Called Bond Record
The Wall Street Journal
Appendix D
Name of Series
Dreyfus Intermediate Term Income Fund
Dreyfus Short Term Income Fund
Schedule A
The fees payable to the Custodian with respect to securities
held in domestic custody are annexed hereto.
Domestic Custody Fees
Basic Fee: 1/100 of 1% per annum of the first $500,000,000, and
1/200 of 1% of the excess over $500,000,000 per annum
of the total market value of domestic securities
held.
Custodial Transactions:
$8.00 per transaction for each receipt and delivery
of book entry securities through DTC/FRB.
$20.00 per transaction for physical settlements,
municipal sub-custodian settlements, writing options
(preparation of depository or escrow receipts) and
initial futures transactions.
$5.00 for futures variation margin maintenance.
$7.00 for P&I paydowns.
$10.00 for GNMA PTC settlements.
$200.00 for the collection of interest on securities
held in "street name".
Schedule B
The fees payable to the Custodian with respect to securities
held in foreign custody are as set forth in a letter dated January
13, 1995 from Jerome P. Isoldi of The Bank of New York to Frederick
C. Dey, a copy of which is attached hereto.
THE BANK OF NEW YORK
90 Washington Street
New York, New York 10286
January 13, 1995
Mr. Frederick C. Dey
Assistant Treasurer
200 Park Avenue
New York, New York 10166
Re: Global Custody Fees
Dear Fred:
This letter is an update of my September 21, 1993 global
custody fee schedule letter addressed to Mr. Jeffrey Nachman for the
Dreyfus Family of Funds.
Safekeeping charges and transaction fees will be applied per
country, as indicated in the attached schedule.
Warmest regards.
Sincerely,
Jerome P. Isoldi
Senior Vice President
JPI/nd
Enclosure
GLOBAL CUSTODY FEE PROPOSAL
THE DREYFUS FAMILY OF FUNDS
AUSTRALIA MEXICO (BONDS)
CANADA NETHERLANDS
FRANCE NEW ZEALAND
GERMANY SWEDEN
IRELAND SWITZERLAND
JAPAN
SAFEKEEPING FEE
12 b.p. PER ANNUM ON FIRST 250MM MARKET VALUE OF ASSETS
10 b.p. PER ANNUM ON NEXT 500MM
8 b.p. PER ANNUM ON EXCESS
TRANSACTION FEE
$50 FOR EACH TRANSACTION
CEDEL
SAFEKEEPING FEE
5 b.p. PER ANNUM ON MARKET VALUE OF ASSETS HELD
TRANSACTION FEE
$25 FOR EACH TRANSACTION
GLOBAL CUSTODY FEE PROPOSAL
THE DREYFUS FAMILY OF FUNDS
SAFEKEEPING TRANSACTIONS
ARGENTINA 30 b.p. $ 75
AUSTRIA 8 b.p. 60
BANGLADESH 40 b.p. 170
BELGIUM 8 b.p. 75
BRAZIL * 45 b.p. 75
CHILE 35 b.p. 90
CHINA 25 b.p. 50
COLUMBIA 45 b.p. 125
CZECH REPUBLIC 50 b.p. 55
DENMARK 15 b.p. 75
FINLAND 10 b.p. 75
GREECE
Bond 25 b.p. 30
Equity 50 b.p. 450
HONG KONG 15 b.p. 100
HUNGARY 5 b.p. 75
INDIA 45 b.p. 125
INDONESIA 15 b.p. 75
ISRAEL 65 b.p. 45
ITALY 18 b.p. 75
KOREA 12.5 b.p. 25
LUXEMBOURG 6.5 b.p. 75
MALAYSIA 15 b.p. 100
MEXICO (EQUITIES) 25 b.p. 60
NORWAY 25 b.p. 125
PAKISTAN 40 b.p. 150
PERU 65 b.p. 175
PHILIPPINES 12.5 b.p. 150
POLAND 50 b.p. 150
PORTUGAL 25 b.p. 220
SINGAPORE 15 b.p. 150
SOUTH AFRICA 12.5 b.p. 150
SPAIN 8 b.p. 50
SRI LANKA 20 b.p. 60
TAIWAN 15 b.p. 150
THAILAND 18 b.p. 95
TURKEY 25 b.p. 60
UNITED KINGDOM 8 b.p. 50
URUGUAY ** 55 b.p. 75
VENEZUELA 45 b.p. 75
* Includes Local Administrator.
** $4,000 Per Year, Per Account.
OUT-OF-POCKET EXPENSES
TELEX, TELEPHONE, SECURITIES REGISTRATION, ETC., ARE IN ADDITION TO
THE ABOVE.
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
SHAREHOLDER SERVICES PLAN
Introduction: It has been proposed that the above-
captioned investment company (the "Fund") adopt a Shareholder
Services Plan under which the Fund would pay the Fund's
distributor (the "Distributor") for providing services to (a)
shareholders of each series of the Fund or class of Fund shares
set forth on Exhibit A hereto, as such Exhibit may be revised
from time to time, or (b) if no series or classes are set forth
on such Exhibit, shareholders of the Fund. The Distributor would
be permitted to pay certain financial institutions, securities
dealers and other industry professionals (collectively, "Service
Agents") in respect of these services. The Plan is not to be
adopted pursuant to Rule 12b-1 under the Investment Company Act
of 1940, as amended (the "Act"), and the fee under the Plan is
intended to be a "service fee" as defined in Article III, Section
26, of the NASD Rules of Fair Practice.
The Fund's Board, in considering whether the Fund
should implement a written plan, has requested and evaluated such
information as it deemed necessary to an informed determination
as to whether a written plan should be implemented and has
considered such pertinent factors as it deemed necessary to form
the basis for a decision to use Fund assets for such purposes.
In voting to approve the implementation of such a plan,
the Board has concluded, in the exercise of its reasonable
business judgment and in light of applicable fiduciary duties,
that there is a reasonable likelihood that the plan set forth
below will benefit the Fund and its shareholders.
The Plan: The material aspects of this Plan are as
follows:
1. The Fund shall pay to the Distributor a fee at the
annual rate set forth on Exhibit A in respect of the provision of
personal services to shareholders and/or the maintenance of
shareholder accounts. The Distributor shall determine the
amounts to be paid to Service Agents and the basis on which such
payments will be made. Payments to a Service Agent are subject
to compliance by the Service Agent with the terms of any related
Plan agreement between the Service Agent and the Distributor.
2. For the purpose of determining the fees payable
under this Plan, the value of the net assets of the Fund or the
net assets attributable to each series or class of Fund shares
identified on Exhibit A, as applicable, shall be computed in the
manner specified in the Fund's charter documents for the
computation of net asset value.
3. The Board shall be provided, at least quarterly,
with a written report of all amounts expended pursuant to this
Plan. The report shall state the purpose for which the amounts
were expended.
4. This Plan will become effective immediately upon
approval by a majority of the Board members, including a majority
of the Board members who are not "interested persons" (as defined
in the Act) of the Fund and have no direct or indirect financial
interest in the operation of this Plan or in any agreements
entered into in connection with this Plan, pursuant to a vote
cast in person at a meeting called for the purpose of voting on
the approval of this Plan.
5. This Plan shall continue for a period of one year
from its effective date, unless earlier terminated in accordance
with its terms, and thereafter shall continue automatically for
successive annual periods, provided such continuance is approved
at least annually in the manner provided in paragraph 4 hereof.
6. This Plan may be amended at any time by the Board,
provided that any material amendments of the terms of this Plan
shall become effective only upon approval as provided in
paragraph 4 hereof.
7. This Plan is terminable without penalty at any
time by vote of a majority of the Board members who are not
"interested persons" (as defined in the Act) of the Fund and have
no direct or indirect financial interest in the operation of this
Plan or in any agreements entered into in connection with this
Plan.
Dated: August 24, 1995 EXHIBIT A
Fee as a Percentage of
Name of Series Average Daily Net Assets
Dreyfus Intermediate Term Income Fund .25%
Dreyfus Short Term Income Fund .20%
STROOCK & STROOCK & LAVAN
SEVEN HANOVER SQUARE
NEW YORK, NEW YORK 10004-2696
EXHIBIT 10
August 10, 1992
Dreyfus Short-Term Income Fund, Inc.
144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144
Gentlemen:
We have acted as counsel to Dreyfus Short-Term Income Fund, Inc.
(the "Fund") in connection with the preparation of a Registration
Statement on Form N-1A, Registration No. 33-48856 (the
"Registration Statement"), covering shares of common stock (the
"Shares") of the Fund.
We have examined copies of the Articles of Incorporation and By-
Laws of the Fund, the Registration Statement and such other
documents, records, papers, statutes and authorities as we deemed
necessary to form a basis for the opinion hereinafter expressed.
In our examination of such material, we have assumed the
genuineness of all signatures and the conformity to original
documents of all copies submitted to us. As to various questions
of fact material to such opinion, we have relied upon statements
and certificates of officers and representatives of the Fund and
others.
Attorneys involved in the preparation of this opinion are
admitted only to the bar of the State of New York. As to various
questions arising under the laws of the State of Maryland, we
have relied on the opinion of Messrs. Venable, Baetjer & Howard,
a copy of which is attached hereto. Qualifications set forth in
their opinion are deemed incorporated herein.
Based upon the foregoing, we are of the opinion that the Shares
of the Fund to be issued in accordance with the terms of the
offering as set forth in the Prospectus included as part of the
Registration Statement, when so issued and paid for, will
constitute validly authorized and issued Shares, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to the reference to us in the
Prospectus included in the Registration Statement, and to the
filing of this opinion as an exhibit to any application made by
or on behalf of the Fund or any distributor or dealer in
connection with the registration and qualification of the Fund or
its Shares under the securities laws of any state or
jurisdiction. In giving such permission, we do not admit hereby
that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933 or the
rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
STROOCK & STROOCK & LAVAN
VENABLE, BAETJER AND HOWARD
1800 MERCANTILE BANK & TRUST BUILDING
2 HOPKINS PLAZA
BALTIMORE, MARYLAND 21201-2978
August 7, 1992
Stroock & Stroock & Lavan
Seven Hanover Square
New York, New York 10004-2594
Re: Dreyfus Short-Term Income Fund, Inc.
Ladies and Gentlemen:
We have acted as special Maryland counsel for Dreyfus
Short-Term Income Fund, Inc., a Maryland corporation (the
"Fund"), in connection with the organization of the Fund and the
issuance of shares of its common stock, par value $.001 per share
(the "Common Stock").
As Maryland counsel for the Fund, we are familiar with
its Charter and Bylaws. We have examined the prospectus included
in its Registration Statement on Form N-1A, substantially in the
form in which it is to become effective (the "Prospectus"). We
have further examined and relied upon a certificate of the
Maryland State Department of Assessments and Taxation to the
effect that the Fund is duly incorporated and existing under the
laws of the State of Maryland and is in good standing and duly
authorized to transact business in the State of Maryland.
We have also examined and relied upon such corporate
records of the Fund and other documents and certificates with
respect to factual matters as we have deemed necessary to render
the opinion expressed herein. We have assumed, without
independent verification, the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and
the conformity with originals of all documents submitted to us as
copies.
Based on such examination, we are of the opinion and so
advise you that:
1. The Fund is duly organized and validly existing as
a corporation in good standing under the laws of
the State of Maryland.
2. The 8,000 shares of presently issued and
outstanding Common Stock of the Fund have been
validly and legally issued and are fully paid and
nonassessable.
3. The shares of Common Stock of the fund to be
offered for sale pursuant to the Prospectus are,
to the extent of the number of shares authorized
to be issued by the Fund in its Articles of
Incorporation, duly authorized and, when sold,
issued and paid for as contemplated by the
Prospectus, will have been validly and legally
issued and will be fully paid and nonassessable.
This letter expresses our opinion with respect to the
Maryland General Corporation Law governing matters such as due
organization and the authorization and issuance of stock, but it
does not extend to the securities or "Blue Sky" laws of Maryland,
to federal securities laws or to other laws.
You may rely upon our foregoing opinion in rendering
your opinion to the Fund that is to be filed as an exhibit to the
Registration Statement. We consent to the filing of this opinion
as an exhibit to the Registration Statement.
Very truly yours,
VENABLE, BAETJER AND HOWARD
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Condensed
Financial Information" and "Custodian, Transfer and Dividend Disbursing
Agent, Counsel and Independent Auditors" and to the use of our report
dated August 30, 1995, in this Registration Statement (Form N-1A 33-48926)
of Dreyfus Investment Grade Bond Funds, Inc., (formerly Dreyfus Short-Term
Income Fund, Inc.)
ERNST & YOUNG LLP
New York, New York
November 28, 1995
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<NAME> DREYFUS SHORT-TERM INCOME FUND, INC.
<MULTIPLIER> 1000
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<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> JUL-31-1995
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<TOTAL-LIABILITIES> 6675
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<PAID-IN-CAPITAL-COMMON> 225544
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</TABLE>
